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As of the second quarter of last year, the U.S. student loan debt stood at $1.73 trillion (Hess, 2021). These statistics showed that the debt has been increasing annually. The federal government has undertaken several measures to reduce the debt by pausing the interest rates, among other actions. However, the loan has kept on increasing each year. During the campaigns leading to the 2020 elections, Joe Biden promised to introduce a plan to address student loans. President Biden’s plan of federal loan forgiveness has led to several debates, with critics arguing that it could be a bad policy if the Biden administration implemented this major relief to the students. Student loans should be forgiven as this will be a relief for those overwhelmed by the debt burden, hindering their growth and the development of the economy as a whole.
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Student loans should be forgiven because they have become a national crisis. Joe Biden sought to forgive the student loans arguing that the loans have hindered the success of most students, especially those from middle- and low-income families. Therefore, this move would relieve the families in the long run by giving them a sustainable income that they can use to grow themselves and improve the economy. Besides, the forgiveness will come at perfect timing, considering the detrimental effects the economy has experienced due to the pandemic. The shocks of the pandemic affected most Americans. Providing relief by canceling the student loans will help the people recover from the economic losses and reestablish themselves. Factors like the Great Recession of 2008, Covid-19, and any other emergencies are part of the conditions covered by the HEROES Act. According to Most (2022), the White House used the HEROES Act to argue why student loans ought to be forgiven. The Act was enacted in 2003 after the 9/11 attack to shield people against similar crises (Yuen, 2020). According to Biden’s student loan law, the education secretary should grant learners relief based on the HEROES Act during national emergencies or wartimes. As such, addressing the economic issues brought by the Coronavirus will require the implementation of similar cancelations of student loans.
Besides, building a sustainable economic recovery will require reducing the burden on the citizens. When citizens are not bothered about student loans, their productivity will increase. Moreover, the fact that student loans hindered them from many opportunities, such cases will cease to exist. Biden noted that most students do not have their academic papers due to huge debts they cannot pay, so they cannot be granted access to their certificates. This argument was one of the reasons why the cancelation of the debts would be good for the economy. Dore and Nova (2022) also argue that loan cancelation will be a saving plan for most people. Depending on someone’s income, about $20,000 of the loan debt is forgiven, which means significant savings.
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Loan Forgiveness Is Targeted
Not everyone is eligible for loan forgiveness. This statement expresses that canceling the loans does not mean everyone will be granted freedom from their debts. Only those who need forgiveness the most will be covered by Biden’s law. Furthermore, the amount of loan that would be canceled depends on different conditions. For example, people who received a Pell Grant will get a cancellation of $20,000, while those who did not get the grant will have forgiveness of $10,000. Pell Grant is an aid given to low-income undergraduate learners. It means that people who did not receive the grant are not in much need as the ones who were supported by the grant. Therefore, Biden’s forgiveness plan considers the low-income earners more than the others. By targeting students from lower socioeconomic statuses, the cancellation aims at equality.
The federal student loan forgiveness policy is eligible for persons with an annual income below $125,000 and households or married couples with an income of less than $250,000. As such, the eligibility to fall under Biden’s law demands that each person have such income in 2020 or 2021 (Nova, 2022). What this means is that about 37 million borrowers will qualify for forgiveness. But, comprehensively, it also means that the forgiveness does not apply past 2022, and each person will have to pay their student debts after this period. Also, only borrowers who have operated in the nonprofit sector, the federal, tribal, and local governments, or the military will get credit for the forgiveness of their loans (The White House, 2022). This situation leaves other people in a position to clear their debts out of the plan intended to benefit the less wealthy.
Forgiving student loans will help not only the learners but also the economy. Consequently, the students’ productivity after completing their studies will be boosted as they will focus on development instead of the education burden they have to clear. Providing the cancelation will also be a relief and a saving plan for the graduates. Also, since the forgiveness targets people with a lower annual income and those who rely on the Pell Grant aid, it is a way to ensure equal opportunities. Therefore, loan forgiveness is an economic boost and a way to ensure the country recovers from the financial impacts of the Coronavirus pandemic.
- Dore, K. & Nova, A. (2022, August 24). Here is what President Biden’s student loan forgiveness means for your taxes. CNBC. https://www.cnbc.com/2022/08/24/heres-what-president-bidens-student-loan-forgiveness-means-to-your-taxes.html
- Hess, A. J. (2021, September 9). The U.S. has a record-breaking $1.73 trillion in student debt—borrowers from these states owe the most on average. CNBC. https://www.cnbc.com/2021/09/09/america-has-1point73-trillion-in-student-debtborrowers-from-these-states-owe-the-most.html
- Most, D. (2022, August 26). Would Biden’s forgiveness plan survive a court challenge? B.U. Today. https://www.bu.edu/articles/2022/would-biden-student-loan-forgiveness-plan-survive-court-challenge
- Nova, A. (2022, September 6). Here is everything we know (so far) about Biden’s student loan forgiveness plan. CNBC. https://www.cnbc.com/2022/09/06/all-we-know-so-far-about-bidens-student-loan-forgiveness-plan-.html
- The White House. (2022, August 24). Fact Sheet: President Biden announces student loan relief for borrowers who need it most. The White House. https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/
- Yuen, V. (2020). Mounting Peril for Public Higher Education during the Coronavirus Pandemic. Center for American Progress. https://files.eric.ed.gov/fulltext/ED606582.pdf