There are so many people who are saddled with the burden of student debt, and have been for years. I’m sure there are tons of people that are pretty psyched to hear about Biden’s new loan forgiveness plan. The White House says it could wipe out a whopping $150 billion in debt for around 30 million borrowers.
But as we dig into the details, I started to have some doubts about whether this plan is really going to make a meaningful difference. Sure, it has some potentially helpful provisions, like forgiving up to $20,000 in “runaway interest” and automatically cancelling debt for certain borrowers. But there are also a lot of hoops to jump through and unanswered questions that make me wonder if this is just another empty political stunt.
Kids Aren’t Ready
I do feel that people should be responsible for their own debt, and are obligated to pay their own loans. However, I do have issue with the predatory, and deceitful nature of student loans. At the age of 18, are you really mature or educated enough to understand what you are signing up for? I don’t believe so. I think there needs to much more preparation and education on what student debt means, what the return on investment would be for the amount borrowed, and what your salary would be. Maybe look at trades or certification courses, as I’ve done. As well as how to find alternative ways to pay for college or schooling. As I learned at the session at the EconoMe Conference about the scholarships and grants that are available, for example.
Some Borrowers Could See Real Relief
The most promising part of Biden’s new plan is the provision to forgive up to $20,000 in accrued interest for borrowers making under $120k (or $240k for married couples). This is a big deal, as over 25 million Americans owe more than they originally borrowed due to the insane interest rates on student loans.
The White House also says they’ll automatically cancel debt for around 2 million borrowers who already qualify for forgiveness through programs like Public Service Loan Forgiveness, but haven’t been able to navigate the complicated application process. And borrowers who have been paying for 20+ years (or 25+ for grad loans) could see their remaining balances wiped out entirely. I recall once I was on a date with woman that was a few years older than me, in her early 50s. She mentioned she’ll be paying her student loans into her retirement. What the heck!
These measures could provide meaningful relief for a decent chunk of borrowers who are really struggling under the weight of their student debt. I can totally understand the nightmare of watching your balance grow every month despite making payments, so anything that puts a dent in that is a welcome change.
Tons of Strings Attached and Unanswered Questions
But unfortunately, the devil is in the details with this plan. To get the $20k in interest forgiveness, for example, you have to enroll in an income-driven repayment plan like SAVE. And the relief for long-term borrowers is only available for Direct Loans, leaving out a lot of people with older FFEL or Perkins loans.
There’s also a lot of uncertainty around the provisions for “low-value” education programs and “financial hardship” relief. The administration says they’ll be scrutinizing schools with poor outcomes, but they haven’t defined what exactly qualifies as “low-value.” And the hardship relief seems to require an application process, which means more bureaucratic headaches for borrowers.
Frankly, it all feels a bit too overly complicated and convoluted. People may just want my loans gone, not to have to jump through a million hoops to maybe, possibly get some relief. And based on the legal battles that have already played out over Biden’s previous forgiveness efforts, people aren’t holding their breath that this new plan will survive the inevitable court challenges.
This Doesn’t Solve the Underlying Problem
Even if this plan does manage to survive and provide some relief, let’s be real – it’s just a band-aid on a much deeper, systemic issue. The root cause of the student debt crisis is the skyrocketing cost of higher education, which has far outpaced wage growth for college graduates.
As the White House’s own analysis points out, college sticker prices have skyrocketed in the last 20 years, while salaries for degree-holders have remained relatively stagnant. That’s left a whole generation saddled with crippling debt just to get the qualifications needed for decent jobs.
Forgiving some loans might help individual borrowers in the short term, but it does nothing to address these underlying affordability problems. If we don’t tackle the exorbitant costs of college head-on, we’re just going to be right back here in a few years with a whole new crop of indebted graduates.
Cautious Optimism, With a Healthy Dose of Skepticism
Look, I understand some want to be excited about this plan. Anything that promises to erase a chunk of soul-crushing student debt is going to get my attention. And I do think there are some genuinely helpful elements buried in the fine print.
But I also can’t ignore the massive red flags – the legal vulnerabilities, the crazy complex eligibility requirements, and the fact that it fails to address the core drivers of the student debt crisis. This feels more like political theater than a serious attempt to fix a broken system.
At the end of the day, I’ll believe it when I see it. I’ll be cautiously optimistic as this plan moves forward, but I’m not holding my breath that it’s going to deliver the kind of large-scale, lasting relief that millions of borrowers so desperately need. The real test will be whether this leads to meaningful, systemic change in how we finance higher education in this country.
Until then, many people will keep making my monthly payments and dreaming of the day when they might actually be able to buy a house or start a family without the weight of these loans dragging these people down.
Sorry if this was a bit of downer, my friends. Let’s keep those horns up! \m/ \m/
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