President Joe Biden announced live at Madison Area Technical College that, in the coming months, his administration will be taking action toward relieving student debt loans for millions of Americans. Actions may take effect as soon as this fall, as the Biden Administration plans to forgive up to $20,000 in student loans for over 25 million borrowers. They plan to enact full cancellations for millions more.
Biden announced these major actions last week on Monday, April 8, and outlined them in five steps. The first change is canceling up to $20,000 of runaway interest for any borrower who owes more in debt now than when the loan was first given.
Biden also stated that lower-middle-class families enrolled in the Saving of a Valuable Education Plan will have their student loan interest erased. The SAVE Plan allows families to pay back loan amounts based on family size and income, and it will be utilized according to President Biden for over 2 million Americans who qualify.
Thirdly, the administration plans to cancel student loans borrowed by individuals who started paying back over 20 years ago. Biden proposed that there will also be efforts by the Department of Education to identify students who have been “cheated” by universities, with large loans and little return.
Lastly, Biden stated that the Department of Education will also provide relief to borrowers who are facing financial hardship, including medical debt and overwhelming childcare expenses.
The major announcement is more constricted than ones proposed in past years. However, the five different initiatives laid out by Biden on Monday, if passed, will still positively impact millions of Americans by canceling “runaway interest.”
Borrowers in the United States owe over $1.7 trillion of student loan debt, with approximately 32% of University of California students taking out federal loans. In June 2023, President Biden’s administration attempted to reduce this number by 430 billion, through providing up to $20,000 of unpaid interest on their student loans. However, this was rejected by the Supreme Court, which deemed it unlawful, meaning that no relief was granted to borrowers at this point.
After the Supreme Court’s rejection, the University of California released a statement expressing disappointment in the ruling.
“College affordability is among the University’s highest priorities,” the statement read. “As such, the University offers a robust financial aid program designed to ensure that a UC education remains accessible to all academically eligible California students, regardless of their financial resources. Sixty-one percent of UC’s resident undergraduates complete their degrees without any student loan debt, and 54 percent have their tuition fully covered by financial aid.”
Students must fill out the Free Application for Federal Student Aid, or FAFSA, form to apply for federal or university loans. According to UC San Diego’s Office of Financial Aid, most students, regardless of their income, can access federal loans, which include various repayment choices and opportunities for loan forgiveness.
The Guardian reached out to the Office of Financial Aid to receive a statement regarding how the passing of the legislation would affect UCSD students in the following month. Below is a statement provided by the Office of Financial Aid’s Federal Relations colleague:
“The program announced earlier this week [Biden’s five steps] will go through a rulemaking process, where the Department of Education will collect comments from the public—including any students who wish to comment on the proposal on www.Regulations.gov once the rule has been formally submitted—through the summer before finalizing the program after those comments have been read and considered by the Department. Once the rule is finalized, the Biden Administration has said it expects up to 10 million borrowers to benefit from at least $5,000 in debt reduction.”
According to this source, the Biden Administration has forgiven over 153 billion dollars in loans for over 40 million borrowers.
Seventh College freshman Suhani Pawal shared her insight on how fellow students use loans.
“Some of my best friends here are on their own for college loans, and they always tell me how anxious they are to stay on top of things with these circumstances,” she said. “The loan forgiveness plan, if it goes through for students stressed about finances on top of academics, will have a positive impact.”
Students who are interested in learning more about the Biden Administration’s forgiveness plan timeline and initiatives can do so here.
