Student loan borrowers hoping that President Joe Biden will forgive any significant portion of their debt are likely gritting their teeth. The White House has ruled out loan forgiveness in its upcoming budget proposal as the administration is focused on passing the already passed legislation.
Some advocates and Democratic lawmakers are urging Biden to use his executive powers to write off some of his student debt, $ 10,000 is a popular figure, but critics say it’s overkill. In any case, outright forgiveness of student loans in any amount is unfair. Biden’s decision to focus on updating and redefining the current repayment programs, some of which already offer significant forgiveness at the end of their repayment periods, is the right call.
On the campaign trail, Biden pledged loan forgiveness as a solution to the country’s $ 1.6 trillion student loan debt, which is currently being distributed among an estimated 45 million Americans. However, offering forgiveness to some punishes others who may have taken safer, more accessible educational paths.
It also ignores the fact that current income-based repayment plans are mostly reasonable.
Many other Americans could go to college or other higher education institutions if they knew that money borrowed from the federal government would be forgiven. Many who worked hard to pay off their loans could rightfully feel cheated if those who graduated after them received help and support and they did not.
In retrospect, it is simply unfair to offer such assistance, and from a legal point of view, it is likely to run into reasonable problems as such government spending is not an appropriate use of taxpayer funds. Student loans are not gifts. These are loans, and the dotted line borrowers promise to repay these loans one day.
In addition, a working paper published in April by the Becker Friedman Institute of Economics at the University of Chicago notes that those who borrowed the most in student loans tend to have higher incomes later in life: for example, law and medical graduates. schools will be delighted. increase in debt, but they will earn more in their lives than graduates with only a bachelor’s degree. It is unjustifiable to forgive loans to those who are likely to have the means to pay them back one day.
Finally, there are currently several repayment options for low-income borrowers to ease the heavy burden. Typically, an income-based repayment plan caps a borrower’s repayment at 10% of their discretionary income, calculated as the difference between the borrower’s adjusted gross income and 150% of the amount set by the U.S. Department of Health and Human Services (HHS) as recommended by poverty for the size and condition of the borrower’s family.
Some borrowers end up paying nothing – yes, nothing – if their income is low enough. And for those concerned that the interest charges will be debilitating, the government forgives anything that remains unpaid after 20 years. Such plans are not too onerous.
Under President Donald Trump, and now Biden, federal loan interest and disbursements have been frozen due to economic stress caused by the coronavirus pandemic. This suspension will expire on October 1. As the economy gets back on track, it is necessary to ask alumni to start paying off loans, and those who are still struggling still have options available to them.