US President Joseph Biden’s presidency has been stormed with crippling sequential issues and concurrent ones. On his first day in the oval office, he implemented federal mask mandates and social distancing as a response to Covid-19. He also announced the American Rescue Plan to help fund vaccinations, provide immediate direct relief to families struggling to cope with the pandemic crisis, and aid grappling communities survive the unprecedented global catastrophe.
In May, 2022, the white house introduced The Biden-Harris Inflation Plan to lower the national deficit over a ten-year window and set the economy on a recovery course from the ongoing inflation that many Americans are having difficulties enduring. The proposed legislation won in the capitol and was passed by the senate on August 7. The bill will save Americans $290 billion on Medicare costs, lower healthcare premiums for families that get coverage under the Affordable Care Act, it will invest $369 billion into sustainable energy and tackle the climate crisis, large corporations will start paying a minimum of 15% tax, taxes will not be raised for people making less than $400,000 a year, and as mentioned earlier, the federal deficit will be reduced by $300 billion yearly.
Biden announced the Student Loan Relief plan on August 24, 2022 for borrowers that are stuck in a never-ending cycle of paying off federal student loans. The White House official website published a fact sheet in regards to the plan and stated, “The skyrocketing cumulative federal student loan debt—$1.6 trillion and rising for more than 45 million borrowers—is a significant burden on America’s middle class. Middle-class borrowers struggle with high monthly payments and ballooning balances that make it harder for them to build wealth, like buying homes, putting money away for retirement, and starting small businesses.”
The plan is to provide up to $20,000 in debt cancellation for pell grant recipients with federal loans held by the Department of Education, and up to $10,000 reduction for non-pell grant recipients. The relief will target individual borrowers who make less than $125,000 yearly, and $250,000 for married couples. Federal loan repayments will resume on January 1st, 2023.
This act has many intricacies but it is worth noting that this administration will have the Department of Education reduce the cost of college and hold universities accountable when their cost of attendance hikes up. Furthermore, the ED is proposing a new income-driven repayment process that’ll cut monthly payments in half. Monthly payment maximums for undergraduate borrowers will cap at 5% of their discretionary income. Discretionary income is the amount that is left after taxes, bills, and necessities have been paid off. This is very important in balancing the wealth equity gap that negatively affects mostly black and people of color.
The unclear technicalities of this plan will be revealed as we approach the last quarter of the year, but one question that will need clarification is how couples that consist of only one borrower will receive their funds. If only one partner is a borrower do they fall in the $125,000 category or the $250,000?
Needless to say, this plan is a victorious step towards reforming the American higher education institutions, and encouraging low income individuals to pursue a college degree without the fear of egregious debt.