After President Biden’s inauguration, some people online started asking if the new president would forgive all student loan debt.
Did President Biden offer to forgive all Federal Student Loan Debt?
No, that was not part of his platform.
While President Biden has signed an executive order to extend the hiatus on federal student loan payments with zero percent interest, there is a lot of talk on social media about whether Biden could cancel student loans altogether.
There is currently 43 million people who are currently struggling with federal student loan debt, according to Federal Student Aid.
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Between 2007 and 2020, federal student loan debt rose from about $ 516 billion to about $ 1.5 trillion, setting a new record each year.
“Year after year, more student loan dollars are disbursed than they are repaid, resulting in an expansion of the federal loan portfolio,” 2017 Congress Research Service in short.
So we check: Did President Biden offer to forgive * all * federal student loan debt?
Let’s start with the Biden campaign site, nowhere on the site does it promise to write off or “forgive” all federal student loan debt.
Instead, part of its platform does something called the “income-based repayment program“easier to register.
“So part of Biden’s platform was to make this program simpler, more generous, and easier to enroll,” says Drew Anderson, associate economist at RAND Corporation. “It’s not like wiping out an amount of your debt, but it’s capping your payments so that you never pay more than 5% of your discretionary income; and that, like forgiveness, will come at a cost to them. taxpayers because they will recover less of the student debt.
Let us break down this proposition:
- Those earning less than $ 25,000 will not need to make any payments and will not earn interest.
- Anyone earning over $ 25,000 will pay 5% of their discretionary income over $ 25,000 for their loans, and after making payments for 20 years, the remainder of their loan would be 100% canceled.
McCluskey says President Biden has also discussed several other ideas related to student loans, including offering $ 10,000 in rebate as part of COVID-19 relief and providing more debt relief to those who work in the public service.
Part of that plan would provide public servants with $ 10,000 in undergraduate or graduate debt relief per year for each year they work in “national or community service.”
“He has other forgiveness programs and ideas that he’s talked about, but these are the main ones,” McCluskey said. “So he’s not talking about that really big dollar figure that a lot of people have probably seen, a $ 50,000 and made by the executive order. He wants to work through Congress and he’s looking at smaller proposals to this subject. “
So we can verify that President Biden did not offer to completely forgive all federal student loans; although he did suggest plans to reduce student loan payments for many Americans.
Some additional expert opinions
To take a step back, we asked our experts for their own professional opinion on why student loans have tripled in the past decade.
“Well, all kinds of factors are involved; one of the biggest is when we provide federal student aid, which allows colleges to raise their prices, which then requires more federal student aid,” McCluskey said.
“Colleges are like everyone else, and they think, well if I had more money there are all kinds of good things we could do, build a new recreation facility, start a new academic program. “, he continued. “So aid has kind of started a vicious cycle or is now perpetuating a vicious cycle of more aid, higher prices.”
McCluskey added that the Great Recession
“The Great Recession caused a decrease in the amount of public and local support provided to universities, but that does not explain the increase we have seen over decades in public colleges and universities, and it does. not. really explain the very similar tuition inflation that we have seen at private colleges, which generally do not receive any direct local state subsidy. “
Anderson pointed to the recession, which has increased college enrollment: people are returning to college or staying longer.
He says tuition fees, combined with state, college and charity grants, as well as the federal Pell grant, just aren’t keeping pace, play a major role in federal loan debt. students.
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