Biden relieves student debt

Ava Cai

June 7, 2024

A Ticket to the Middle Class

President Joe Biden stresses the importance of a post-high school education, as it leads to a prosperous middle-class life. However, too many Americans struggle to pay for these seemingly “unreachable” luxuries. This struggle is not one uncertain; since 1980, the total cost of a four-year public and four-year private college has nearly tripled—accounting for inflation. In addition, the Pell Grants that once covered 80% now only cover just 30%, leaving many undergraduate students graduating into deep debt holes. Thus, Biden announced, on April 12, that he was canceling a generous $7.4 billion worth of student loans, helping hundreds and thousands of borrowers enrolled in the Saving on a Valuable Education repayment plan and Public Service Loan Forgiveness plans. This relief plan comes in three parts which are as follows. 

The first part allows for a final extension of the student loan repayment pause. Since the Biden-Harris Administration took office, it has extended loan payments multiple times, resulting in many Americans not having to pay a single dollar in debt. However, Congress has passed a law declaring September 1 as the hard deadline for the extension. Nevertheless, this final extension effort from the White House is a blessing to the low and middle-income Americans who are still trying to cushion their pandemic fall. 

The second part ensures that low and middle-income families are able to transition back into their loan payments. This part of the plan involves the U.S. Department of Education providing an incredibly generous amount of money to both Pell Grant and non-Pell Grant recipients to relieve debt from the Department of Education.  

The third part of this plan is to reform the student loan system into a more manageable one for the future. The Biden-Harris Administration has proposed to create a new income-driven repayment plan. This plan will reduce monthly payments for low/middle-income families, and hold schools accountable when their prices spike. President Joe Biden is also fighting to double the maximum Pell Grant and to make community college free to lend a hand to his fellow Americans. 

With all this money going around, so is the fear that Biden’s student debt relief plan will contribute to the already faltering inflation. However, economists reassured that the impact will likely be so small, that it will do little to the economy at large. The impact on inflation in the U.S. economy is so small, and it is nothing compared to the millions of students who are significantly benefitting from this debt relief and finally being able to take a breath of fresh air.