Americans with outstanding student loans may see their debts reduced following last week’s announcement of the White House’s student loan forgiveness plan by President Joe Biden. True to its name, the plan will forgive up to $10,000 in federal student debt loans, $20,000 if you’re a Pell Grant recipient, in what’s being viewed by some education experts as a step towards alleviating skyrocketing college costs.
Biden also extended the pause on student loan repayments until the end of the year and ensured that those making below the $15 minimum wage wouldn’t have to make monthly payments.
Federick Ngo, a professor specializing in higher education and policy at the University of Nevada, Las Vegas, said that the benefits of the plan for Americans wasn’t being captured by economic projections, which have been used by Republicans to argue that the plan would drive up inflation based on the flawed idea that student loan recipients would go on spending sprees.
In reality, many Nevadans receiving student loan debt relief plus the extended pause will finally be able to have the financial means to move on in their lives. “I’m super grateful for this,” said Shelbie Lynn Swartz, a Pell Grants recipient, who’s now paying back $50,000 instead of $70,000 in loans.
Swartz described her life during the pandemic when her student loan repayments were paused as “freeing,” noting, “I’ve been able to use the money I make to buy a house. I’ve been able to save. I’ve been paying for my wedding. I’ve been able to put that money to good use with these life milestones that I wouldn’t have been able to if I was paying $500, $600 in payments a month.”
Ngo echoed Swartz’s example, noting that forgiving student debt allows for working Americans to enter the next step towards building their lives, one that in the case of Swartz meant business for a wedding planner, a realtor signing off on a house, and more
“It’s not just the benefits to the individual. There’s ways it will benefit you as a taxpayer,” Ngo said, while also noting that forgiving student loans could encourage more people to finish their degrees, particularly in Nevada where the education rates are mostly low across the board.
While most Nevada Democrats lauded the new student loan debt forgiveness plan, Sen. Catherine Cortez Masto (D) criticized the announcement as being ineffectual towards solving the root problem of unaffordable college costs.
Cortez Masto, who has proposed legislation towards expanding the number of Pell Grants and loan forgiveness for lower income students, said in a statement that there needed to be a focus on how to “actually make college more affordable for working families,” instead of mitigating the problem.
According to the latest data, private colleges on average cost $38,070 per year while in-state public colleges cost $10,740 per year. Americans currently owe $1.62 trillion in federal student loans.
Those making less than $125,000 annually, or less than $250,000 as a couple, will be eligible to apply. Currently, the plan is projected to provide relief for 43 million Americans, and is set to erase student loan debt for 20 million Americans entirely.