Biden’s Student Debt Relief Plan: Dissecting Republican Pushback and Confronting Rising Tuition

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Avery Gunderson 

Inter/National Beat

One of President Biden’s boldest campaign pledges to young voters and college graduates, the promise to eliminate up to $10,000 in student debt, has recently been acted upon by the Biden administration’s student debt relief plan. Starting this past week of Oct. through Dec. 31, select borrowers can apply to obtain this one-time federal student loan debt relief. However, this plan also immediately prompted retaliation from Republican state officials and congressional representatives alike. 

The plan addresses student debt through three avenues. The first is debt cancellation of $10,000 for those earning less than $125,000 a year, and up to $20,000 for Pell Grant recipients with low incomes. Second, it enacts a forbearance extension through Dec. 31. Third, it includes a new income-driven repayment which limits monthly payments to five percent of discretionary income for undergraduate borrowers, covers unpaid monthly interest to prevent debt from growing, increases the amount excluded from discretionary income, and forgives unpaid loan balances after 10 years for original loans of $12,000 or less. Additionally, those employed by nonprofits, federal, state, local, or tribal governments are potentially eligible to have the entirety of their student loans forgiven through the Public Service Loan Forgiveness (PSLF) program.

The Biden administration argues that the elimination of student loan debt would help “millions of low- and middle-income Americans get their footing in a volatile economy.” Combatting generational wealth gaps, the plan especially aids middle-class and Black Americans. 

However, the relief plan faces a major challenge in court, since it implements debt forgiveness for federal loans owned by private companies. In an attempt to avoid this challenge, the Biden administration reversed its decision to include students with federal loans owned by private companies; although assumed by a small percentage of all borrowers, this type of loan represents big business interests which fear they will face losses as a result of Biden’s plan. However, borrowers who had already (before Sept. 29) taken steps to consolidate their loans are still eligible for the program. 

The plan may possibly encourage higher education institutions to raise tuition and to encourage students to take on more debt with the promise of compensation from the federal government.

However, the main argument of the opposition is that increased debt could trigger a potential spike in inflation and thus harm American consumers for the next 30 years — particularly those who do not take out student loans or pursue higher education. Except, evidence suggests prices will most likely not be affected.

Leslie Rutledge, attorney general of Arkansas, who filed a lawsuit against the Biden administration, asserted in a statement that Biden’s “unlawful political play puts the self-wrought college-loan debt on the backs of millions of hardworking Americans who are struggling to pay their utility bills and home loans in the midst of Biden’s inflation.” The states of Kansas, Missouri, Iowa, South Carolina and Nebraska have joined in on the suit. 

Opponents of the plan also accuse the Biden administration of being unclear about the true cost. While the Department of Education released an official estimate of the program’s cost — $379 billion throughout its lifetime — the nonpartisan Congressional Budget Office estimates it to be higher, at over $400 billion, and the University of Pennsylvania’s Penn Wharton Budget Model estimates the cost around $500 billion. 

The price tag of the plan is less shocking when keeping in mind the estimated 27 million Americans eligible to receive up to $20,000 in relief and the nearly 40 million who can potentially experience some amount of loan relief. 

Following through on his campaign promise of eliminating at least $10,000 in student loan debt, Biden addressed the challenges that those pursuing a higher education face in one announcement, saying, “An entire generation is now saddled with unsustainable debt in exchange for an attempt, at least, at a college degree.”

It has become harder for younger generations today to pay off loans as the price of college rises more rapidly than inflation, consuming an increasingly larger share of one’s income. 

In the past, state and federal funding guaranteed free tuition across public universities. In 1959, UC Regents and the California State Board of Education declared that “state colleges and the University of California shall be tuition free to all residents of the state.”

However, in 1968, university fees were imposed for the first time per the initiative of Republican president Ronald Reagan. Today, UC Santa Barbara tuition for California residents is roughly $14,985 including fees, while out-of-state residents pay an additional $31,026 on top of baseline tuition. 

Individuals in California currently rank among the least debt-ridden in terms of student loan debt. Over 90 percent of borrowers are eligible to apply to significantly reduce or erase their student loan debt through Biden’s student loan relief plan, as 46 percent of Californias owe roughly $20,000 in student loans as of 2019-2020. 

With nearly 8,000 UCSB students relying on Pell Grants during the 2021-22 school year, the student debt relief plan will hopefully provide breathing space to many. If you believe you are eligible to receive relief from the student debt relief plan, submit your application online before the forbearance expires at the end of the year. Relief is expected within six weeks of application.

Update (Nov. 15): At the time the article was written, the application for student loan relief was open. However, the application is currently closed, as federal courts have blocked the plan.

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