President Joe Biden campaigned on a promise of providing relief for students facing student loan debt. Now that he’s in office, many are curious what his plan for student loan forgiveness actually includes. Here’s what we know so far:
What is Biden’s Plan for Student Loan Forgiveness?
Biden’s plan for student loan forgiveness consists of three main initiatives:
- Canceling $10,000 of student loan debt for all borrowers.
- Extending Public Service Loan Forgiveness (PSLF) to forgive up to $50,000 of debt for those employed in public or nonprofit jobs.
- Establishing an income-driven repayment plan that caps payments at 5% of a borrower’s discretionary income.
Who Could Benefit From Loan Forgiveness?
By taking action on Biden’s plan, all federal student loan borrowers would qualify for the $10,000 loan forgiveness. Furthermore, those employed in public service or nonprofit jobs would qualify for an expanded Public Service Loan Forgiveness program that could forgive up to $50,000 of debt. Furthermore, an income-driven repayment plan would be made available to all borrowers as well.
What effects would loan forgiveness have on the economy?
Advocates for student loan forgiveness argue that it would provide a significant stimulus to the economy. With monthly loan payments eliminated or reduced, borrowers would have more money to spend on other goods and services, potentially stimulating economic growth and creating jobs.
What could be the potential drawbacks of loan forgiveness?
Critics of loan forgiveness argue it would be prohibitively expensive, costing taxpayers billions of dollars. Furthermore, they maintain that it would disproportionately benefit high-income individuals who attended expensive universities and do little to address other problems within higher education such as increasing tuition prices.
Joe Biden’s plan for student loan forgiveness is still being refined, but it could provide much-needed relief to millions of borrowers facing overwhelming student debt. While there may be drawbacks to this initiative, many believe that its advantages outweigh any costs.