Biden’s Student Loan Relief Plan, unresolved issues

Alexandra Warner

On Aug. 24, Biden proposed a three-part plan to cancel $10,000 in federal student loan debt for low to middle income borrowers. As promising as it sounds (I’m all for finding ways to make college affordable), it leaves many problems unresolved — students fail out and have to pay loans, taxes may increase, etc. — and seems like a flashy boost for the Democratic Party in this fall’s midterm elections.

In order to get a student loan, a family must apply for one, and poorer families are also granted Pell Grants. Biden proposed in his plan that he would forgive up to $20,000 for the families who earn Pell Grants. These grants are not loans and they do not need to be repaid unless the student withdraws from the college that year. Stafford loans are a type of federal student loan that are subsidized by the government — the government pays the interest while the student is  in school. They are supposed to help students cover the cost of college but can be quite dangerous.

According to, President Biden said that “a post-high school education should be a ticket to a middle-class life.” In other words, college equals success. However, if students are not given the right education or attend  a high school with low graduation rates, many are not prepared to go to college. The Biden administration believes that giving loans to lower income students will push them to go to college which will lead to a better life or job. Although it seems like a good idea, these students can fail out of college and still have to pay all of their tuition and student debt. According to Forbes, 3 million kids start in college and over 1 million fail out or drop out every year. And according to an article in 2021 from the website Lendedu, 46.5 percent of dropouts are in default of their student loan debt, leaving massive loans that they need to pay back. Under the law, one cannot declare bankruptcy on student loan debt. And if a student comes from a low income family, paying that debt will be a seemingly impossible task.

A question to consider is who exactly are we helping out? According to Bloomberg, an analysis released on Aug. 23 revealed that around “42 percent of the benefits of student loan forgiveness would go to the wealthiest two-fifths of Americans, with the bottom fifth receiving just 12 percent.” published  that borrowers are eligible for relief if their individual income is less than $125,000 a year if they are single, and $250,000 for married couples. Just to clarify, someone making $125,000 a year is not poor. These young adults who are at the beginning of their careers — lawyers for example — are basically offered a tax break. The lower class with an income of less than $60,000 are the ones who need the help the most, not people who will have a bright future in their careers.

And who will be the ones paying for the loans? Everyone. Those who have already paid their loans and people who have never been to college. Those who never made it to college  because they couldn’t afford it are paying student loans for other people, this also raises the fairness question.

If this plan is passed, taxes could increase in order to pay off all the people who apply for these loans. The combination of canceling debt and extending the repayment freeze, which suspended student loan payments because of Covid-19, will cost taxpayers billions of dollars. Even worse, by stripping the government of expected revenue, it will reduce funding available for investments in K-12 and early childhood learning that would promote economic opportunity and future growth which could impact graduation rates creating the same problems Biden’s plan attacks.

Related to this issue is that the Democrats claimed to protect future students and taxpayers by reducing the cost of college and holding schools accountable when they increase prices. claims that “colleges [will] have an obligation to keep prices reasonable and ensure borrowers get value for their investments, not debt they cannot afford.” However, that’s not true. Private and state colleges are their own institutions and the government does not have any jurisdiction to decrease the debt or prices that a college has, so the student loan debt issue isn’t resolved with Biden’s Plan.

Lastly, this plan can cause higher inflation rates. While loan forgiveness won’t put cash in borrowers’ pockets, it still risks inflation by encouraging consumers to spend money that they would have to put towards paying their debts. And wiping out debt now will only encourage students to take out still-bigger loans in the future, reducing incentives for colleges to hold down tuition costs — thus, making higher education even less accessible for the middle class.

Even though the three-step plan seems thought out, it has a lot of flaws that could make not only our economy worse but student loans even more difficult to pay off. Biden should be, at a minimum, removing the repayment freeze and helping taxpayers. However, these changes can only do so much. In the end, everyone will be stuck paying the bills.

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