EXPLAINED: What Is Biden’s Student Loan Forgiveness Plan? How Does It Work? Who Is Eligible? How To Apply?

Student Loan Forgiveness Plan: President Biden’s unprecedented move to ease higher education for American students aims to wipe out the student debt that otherwise stands as a lifelong burden on students. 

What Is Biden’s Student Loan Forgiveness Plan?

Biden’s student loan forgiveness plan unveiled by president Biden aims to provide up to $20,000 in federal student loan cancellation. This will be done for up to 20 million borrowers. Many of the students seeking loan forgiveness will receive the forgiveness automatically.

The Application Process

According to the Education Department, approximately 8 million borrowers who already have their income information shared with the Department will be eligible for student loan relief automatically.

As per the  Education Department, an official student loan forgiveness application will be made available by early October.

To be eligible for loan forgiveness, borrowers must submit an application for the same. Soon, after submission of the application, it is expected that the Department will provide the relief within 4 to 6 weeks.

Who Is Eligible To Apply?

According to the plan, borrowers seeking loan forgiveness must earn less than $125,000 per year to be eligible. In case they are married, they must earn less than $250,000.

Officials advise the forgiveness seekers to fill out the application by November 15, 2022.

Is Biden’s Student Loan Forgiveness Plan A Bad Idea For The Economy?

As per the detailed speech by the U.S. Senator Roy Blunt, the student loan forgiveness plan by the Biden Administration is not as good as it seems, for the following reasons:

1. It inappropriately favors the wealthier Americans

First things first, Roy Blunt states that out of all the people who borrow loans for higher education, 60 percent is held by households earning more than $74,000 of annual income. Also, there are many individual student loan borrowers struggling financially. 

Blunt also says that the opportunity to attend college and earn a college degree is an asset that leads to higher income. Instead, Blunt suggests that instead of forgiving student loans, attempts to lower the cost of college must be made.

2. Blunt also says that Biden should focus on lowering inflation instead of canceling student loans.

Blunt also remarks that forgiving student loans on a wide scale may increase inflation. Instead, Biden should focus more on reducing the crushing inflation. Forgiving student loans will only benefit the wealthier population.

3. Student Loan Forgiveness sends a wrong message about personal responsibility

Blunt argues that a wide range of student loan forgiveness will in fact increase college costs. In the future, students who wish to pursue higher education will borrow the loans thinking that they would never have to pay them back. This sends a poor message about personal responsibility.