Will they be forgiven?
On August 24th, 2022, President Biden announced his student loan forgiveness plan. Biden’s plan is to cancel $10,000 of student loan debt for “low to middle-income borrowers” (The White House, 2022, para. 1). Many who pursue higher education are finding themselves in heaps of loan debt; however, can it truly be forgiven? If so, concerns about what would manifest as a result have been raised. Firstly is the concern of cost. The White House estimates a 300 billion dollar price tag; however, according to the Wharton School, the total impact of this plan could be 1 trillion dollars (Burroughs, 2022, para. 9). The current state of inflation brings more concern to this price tag. Additional consequences of this plan are what it incentivizes current students to do. Some students have been able to keep their loan debt below the $10,000 dollar forgiveness maximum or have no bed at all.
Nevertheless, in light of Biden’s announcement, it is foreseeable that students will intentionally take out loans, realizing they have the promise of forgiveness. As a result, the plan would increase the overall amount of student loan debt across the nation. The increase in student loan debt could be compounded if the plan does not actually see fruition. Attorney general Mark Brnovich says this plan is on “very, very shaky legal grounds right now” (Sheffey, 2022, para. 2). The Biden administration claims they have the authority to enact the forgiveness plan under the HEROES Act of 2003, which gives the education secretary the ability to change student-loans in the context of a national emergency (Sheffey, 2022, para.4). The claim against Biden’s forgiveness plan is that it is an overreach of this authority. In the case that the forgiveness plan is overturned, hopefully, it will be sooner rather than later so that borrowers are not becoming reliant on the plan.
References
Burroughs, Dillon. (2022, September 7). ‘Excessive’: Democrat Joe Manchin Blasts Biden’s
Student Loan Forgiveness Plan. Daily Wire. Retrieved from: https://www.dailywire.com/news/excessive-democrat-joe-manchin-blasts-bidens-student-loan-forgiveness-plan
Sheffey, Ayelet. (2022, September 8). A GOP attorney general says people are 'celebrating
prematurely' Biden's student-loan forgiveness, suggesting lawsuits are to come. Business Insider. Retrieved from: https://www.businessinsider.com/arizona-attorney-general-prematurely-celebrating-biden-student-loan-forgiveness-lawsuits-2022-9
The White House. (2022, August 24). FACT SHEET: President Biden Announces Student Loan
Relief for Borrowers Who Need It Most. Retrieved from: https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/
Josh,
Great post! I think you bring up an excellent point in regards to student's intentionally taking out loans because they know that they will be "forgiven." I wonder if this will cause an even greater loan crisis. Federal loans are generally capped in the 20 thousand amount. Therefore, many students will still have loans to pay after their ten thousand amount is forgiven. My concern is that you will now see thousands of more students taking out loans because of this partial forgiveness plan, but this will; only make the problem worse.