Biden’s Student Loan Debt Cancellation Plan

On August 24, 2022, Biden’s three-part plan to counter skyrocketing student loan debt was announced. This plan includes targeted debt relief, a student loan system which helps protect borrowers, and prevents colleges raising costs. More specifically, the plan will allow people to cancel up to 20,000 dollars in debt due to financial burdens caused by the pandemic and lower monthly payments on loans; the loan repayment pause will continue until December 21, 2022.

Now that the plan has been proposed the real challenge begins. The policy has to now face potential legal battles and lawsuits from loan servicers and lawmakers who claim that they stand to lose from this plan. These problems are what halted a debt relief program last year that aimed to help farmers who are socially disadvantaged.

Though the plan will face challenges it is widely supported by those who view it as a way to bridge the racial wealth gap, especially now that the amount of student loans has gone up 20% in the last 19 years. Some benefits of this cancellation are the addition of jobs and the growth of our GDP. There are others who claim that student debt cancellation is regressive and are concerned about how much money it is using. To this Biden says “Last year, we cut the deficit by more than $350 billion. This year, we’re on track to cut it by more than $1.7 trillion by the end of this fiscal year. The single-largest deficit reduction in a single year in the history of America. — There is plenty of deficit reduction to pay for the programs.” Still there are people who have issues with the fairness of the plan. “I believe it is fundamentally unfair, particularly if you think about all those Americans out there and those families, many of whom never had the opportunity to go to college or those who did and paid — paid their loans down already, paid them back, or their parents pinched pennies and made it possible for them to get through college,” said Senator John Thune.

This plan has many obstacles in its path. If it succeeds, over 40 million borrowers could apply for this plan, and 20 million could cancel all of their remaining debt. No lawsuit has been filed, but some resistance is expected with GOPs and senators connected to the Heritage Foundation planning on blocking this program. Despite this, borrowers are still expected to be able to apply in October and some can even get their loans automatically cleared.