On Wednesday, Biden announced that those in debt with student loans would be eligible for loan forgiveness of up to $20,000 in an attempt to remedy the student loan debt epidemic that plagues one in seven people living in this country.
Individuals with student loans that make less than $125,000 a year or households that make less than $25,000 qualify for up to $10,000 in relief. Students who received the pell grant during their time in school qualify for $20,000 in debt relief. The majority of people being directly affected by this plan are among the most desperate borrowers, an estimated 90% of the money is going to those making less than $75,000 a year.
This sets up an estimated 43 million Americans to have their loan payment reduced and 20 million to have their loans forgiven entirely. Biden hopes that this debt reduction will help stimulate the economy. “All of this means people can start to finally crawl out from under that mountain of debt to get on top of their rent and their utilities, to finally think about buying a home or starting a family or starting a business,” Biden said.
“This does have the potential to raise the living standards for tens of millions of people,” said Scott Horsley, NPR’s chief economic correspondent. However, Biden’s plan does not help those who choose not to go to college or could not go due to financial burdens or inaccessible education.
In March 2020, it was announced that collection of student loans would be paused because of the Coronavirus pandemic. However, the pause on paying back student loans ends in December. Now is the optimal time to provide relief to those that wouldn’t be able to pay back their student loans starting in December.
Biden’s plan will help millions of Americans who do have student loans. There are many people rightfully excited at that prospect. However, the issue of inaccessible education doesn’t change. Colleges will continue to force students who attend to borrow money that they don’t have while promising them a future in which they can pay off those loans.
The wealth gap in America continues to grow with the top 1% of households holding 32.3% of the country’s wealth and the bottom 50% holding just 2.6% according to Federal Reserve data published for quarter four in 2021. This plan stands to benefit primarily households that either make less than $250,000 per year or individuals that make less than $125,000 per year. Biden’s plan might not immediately affect the wealth gap, but it is a step in the right direction.