President Joe Biden’s plan to forgive up to $20,000 in student loan debt for millions of Americans represents an attempt to find a middle ground on an issue the administration has struggled with ever since taking office.
The core dilemma, for both Biden officials and the continuing public debate over loan forgiveness, might be summed up with a simple question: What is fair?
Why We Wrote This
To many Americans, a Biden plan to forgive student debt lightens a millstone burdening young generations. Others say the plan is unfair to taxpayers and to past borrowers who paid in full.
Opponents say that in this case using money from all taxpayers to provide targeted relief to a few individuals isn’t fair at all. Those individuals incurred their debt freely. What about past generations of students who tightened belts to pay for higher education?
The plan outlined by President Biden at the White House Wednesday would cancel $10,000 in federal student loan debt for individuals with incomes under $125,000 a year or for couples with incomes under $250,000 a year. In addition, those with federal Pell Grants, which are awarded to undergraduates with an exceptional financial need, are eligible for $20,000 in loan forgiveness.
Fairness aside, a lingering question is whether the Biden administration has the legal authority to put such a sweeping program in place through executive action alone.
President Joe Biden’s plan to forgive up to $20,000 in student loan debt for millions of Americans represents an attempt to find middle ground on a huge issue the administration has struggled with ever since assuming office 19 months ago.
The core dilemma, for both Biden officials and the continuing public debate over loan forgiveness, might be summed up with a simple question: What is fair?
Opponents say that in this case, using money from all taxpayers to provide targeted relief to a few individuals, isn’t fair at all. Those individuals incurred their debt freely. What about past generations of students who tightened belts to pay for higher education? And won’t another round of government fiscal stimulus overheat the economy?
Why We Wrote This
To many Americans, a Biden plan to forgive student debt lightens a millstone burdening young generations. Others say the plan is unfair to taxpayers and to past borrowers who paid in full.
There’s some dispute about what the macroeconomic effect of Mr. Biden’s plan might be, says Steven Teles, a political scientist at Johns Hopkins University, who cautions that he’s not an economist. “But it’s hard to see how it’s not inflationary.”
Supporters hold that it’s fair to help borrowers battered by fast-rising college costs, falling public investment in schools, and too-often predatory educational institutions. Targeted loan relief could help ease racial disparities in the economy, they say.
School debt can persist long after borrowers enter the workforce, add supporters of the Biden plan. Relief could help millions improve their lives.
Ellyse Marques, an environmental consultant in Gainesville, Virginia, graduated from college in December 2020. She had $20,000 in student debt, which she’s since paid down to $12,000.
Student loans are her biggest financial burden. She and her new spouse have been thinking about buying a house, and loan relief might make that possible.
“I feel great about it because I just got married and my husband and I are trying to plan our future and plan finances,” Ms. Marques says.
The Biden plan
The plan outlined by President Biden at the White House Wednesday would cancel $10,000 in federal student loan debt for individuals with incomes under $125,000 a year or for couples with incomes under $250,000 a year. In addition, those with federal Pell Grants, which are awarded to undergraduates with an exceptional financial need, are eligible for $20,000 in loan forgiveness.
The plan also aims to make loans more manageable for students in the future. Monthly loan payments would be capped at 5% of a borrower’s discretionary income, down from the current 10%. It calls for the government to cover the monthly interest for those making minimum payments, so that the total amount owed woul