Joe Biden’s Loan Forgiveness and How it Affects You!
Becca Boynton | September 22, 2022
On Aug. 24, President Joe Biden announced the cancellation of up to $20,000 of debt to receivers of the Pell Grant. Non-recipients of the Pell Grant will receive up to $10,000 in loan forgiveness. Biden has enacted this plan in order to manage the financial damages that the COVID-19 pandemic caused to low and middle-class families.
Since the start of the pandemic, universities and colleges have had to increase tuition costs mainly due to inflation and a mass amount of shortages of vital resources. Lelia Baruch, a sophomore at Warren Wilson College (WWC) and a receiver of the Pell Grant revealed that her family struggled during the pandemic immensely.
“Even with the money I receive that isn’t the Pell Grant, I would probably be unable to come to college without it,” Baruch said.
Additionally, this forgiveness of loans can help college graduates. The average college graduate accumulates $25,921 in debt after they graduate. Biden's plan will eliminate up to $20,000 for people who received grants while they attended college.
To obtain this loan forgiveness, eligible borrowers must apply for Biden’s loan program. Eligibility will be based on taxes from the year 2020-2021.
Relief will be received automatically for most borrowers but some will need to apply if the Department of Education does not have their updated income information. Applications are expected to be released in early October. The deadline to apply is set for Nov. 15. Loan borrowers should expect relief within four to six weeks of application.
Many have garnered questions about Biden’s plan and how it will affect the general population. Biden claims that this program will not increase taxes at a federal level, but some states will be subject to increased state income taxes. States such as North Carolina, Mississippi, Wisconsin and Arkansas will regard Biden’s loan elimination as income, leading to higher tax rates for affected people.
Nevertheless, many consider this a small degree of improvement on an issue that affects 48 million Americans today.
Rob Wylie, a WWC alum from 2004, used the Pell Grant to assist him in paying for his out-of-state tuition. However, that did not prevent him from developing a mass amount of student debt.
“I had friends after graduation that went volunteering, travel, things like that, and us that had loans were like no, we have to earn money and figure how to pay off this debt,” Wylie said.
In 2017, Wylie officially paid off the remainder of his student loans. Others such as Grace Hatton, a WWC graduate from 2014, are still paying off their debt and will be affected by Biden's new plan.
“For lack of a better term, what I am bringing to my relationship is a lot of debt,” Hatton said. “But now we can put more money towards a mortgage, a house, traveling and not having to budget $300 to pay off my student loan payment.”