The Biden Administration Announces New Student Loan Relief Plan

Hannah Elstro, MVC writer and photographer

As of August 24th, 2022, the Biden Administration has announced a new plan to help “provide families breathing room as they prepare to start repaying [student] loans after the economic crisis brought on by the pandemic.”
The fact sheet released by the White House on their official website states, “Since 1980, the total cost of both four-year public and four-year private college has nearly tripled, even after accounting for inflation. Federal support has not kept up… That has left many students from low- and middle-income families with no choice but to borrow if they want to get a degree. According to a Department of Education analysis, the typical undergraduate student with loans now graduates with nearly $25,000 in debt.”
The plan targets lower and middle class Americans specifically, with the release stating, “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 away money for retirement, and starting small businesses.” As such, the plan is designed with these people in mind.
The actual plan itself has three goals: provide targeted relief of the financial harm the pandemic has caused, make the student loan system more manageable for current and future borrowers, and to protect future students and taxpayers from high costs and price-hiking schools.
The first goal, to provide targeted relief to the financial harm of the pandemic, has aimed to help by providing up to $20,000 in relief to Pell Grant recipients, and up to $10,000 for other borrowers who make less than $125,000 ($250,000 for married couples). It is also stated that no high income individuals or households (in the top 5%) will benefit from this. This part of the plan also extends the pause on federal student loan repayment one final time, through December 31st, 2022.
The second, to make the student loan system more manageable for current and future users, is going to be targeted in several ways. First is the plan to cut monthly payments in half for undergraduate loans. This will cap the undergraduate loan rate at 5%, half of what most people pay on their current plans, lowering the average annual payment by over $1,000 for current and future payers. Second, the administration plans to fix the Public Service Loan Forgiveness (PLSF) program by writing into law that borrowers who have worked at a nonprofit, in the military, or in any form of the government, will receive “appropriate credit” towards loan forgiveness. This should help further the changes the Department of Education has already made to the program, under which more than 175,000 public service members have had more than $10 billion in loan forgiveness approved.
The last goal, to protect future students and taxpayers from high costs and price-hiking schools, is another collaboration between the government and the Department of Education. Currently, the plan is for the President to continue to fight to “double the maximum Pell Grant and make community college free.” However, in the meantime, colleges will now have an obligation to “keep prices reasonable and ensure borrowers get value for their investments, not debt they cannot afford.” On top of this, the Department of Education is announcing new efforts to ensure student borrowers get value for the costs associated with colleges.
This plan, in the end, is aiming to provide relief for up to 43 million borrowers, target relief dollars to mostly low and middle income borrowers, help borrowers of all ages, and advance racial wealth equality.
All in all, this plan is a sign that what many Americans have hoped for, a large reduction of the student loan strain on the average American, may actually happen.

All quotes and information from this article is sourced directly from the White House’s “FACT SHEET: President Biden Announces Student Loan Relief for Borrowers Who Need It Most” linked here.