By Connie Lee and Samantha Padilla, September 6, 2022
President Biden announced on August 24 that the US Department of Education will provide a three-part plan to pledge $10,000 in federal student loan forgiveness.
According to the White House, the three-part plan begins by providing debt forgiveness to people who have been financially impacted during the pandemic. Pell Grant recipients with loans borrowed from the Department of Education will receive up to $20,000 in loan forgiveness. Borrowers who are not eligible for the Pell Grant will receive up to $10,000 in debt forgiveness. To allow for a successful adjustment of refunds, refunds have been suspended until December 31, 2022.
“Based on the news I’ve heard about President Biden forgiving student loans, I can honestly say it’s a huge relief and I’m excited to see how it’s going to pan out,” said Edgar Castañeda, a biology student. “I feel like it would definitely help our students like me who are struggling to repay large loans, while trying to manage our ability to pay our tuition.”
The second part of the plan is to ensure that the student loan system is affordable for undergraduate students. By doing so, undergraduates will pay half of the monthly payments, resulting in a reduction of more than $1,000 for future loan recipients. The final plan is to reduce the cost of college education by increasing Pell grants and making community college free.
In the United States, an estimated $1.6 trillion in federal student debt is a significant burden on students. Student loans are the largest form of consumer borrowing for higher education in the United States and have grown significantly over the years.
President Biden’s plan will give loan forgiveness to 43 million borrowers and cancel student debt for about 20 million borrowers, according to the White House.
With the recent student loan forgiveness announcement, several CPP borrowers have contacted the FAFSA and wondered if they are eligible for the forgiveness plan and would like to know how they can enroll in the process. The official FAFSA website crashed after President Biden’s announcement within the first three days of the proposal.
Federal loans will be forgiven after a process to qualify for the forgiveness plan. For borrowers already registered in the system, their loans will be automatically rejected because their income information is already registered. However, those who are not in the system will need to register and see if they are eligible, for example by providing information such as their annual income and the number of loans they have.
“I feel like there’s always going to be a catch,” said Denise Benavides, a graduate student in social work. “I am happy that we are being supported and that some of the debt is forgiven, especially during today’s difficulties. I think this will also affect students of the future generation as tuition fees increase every year despite inflation.
Student debt forgiveness will help more than 8 million borrowers, with 87% of student loan forgiveness benefiting people with annual incomes below $75,000 and 13% of the forgiveness helping borrowers whose personal income between $75,000 and $125,000.
“To wrap up. This is something our president has promised since he was elected,” said David Jimenez, CPP Office of Financial Aid and Scholarships Counselor and graduate student. I kind of thought it was a bit out the door and maybe he promised something he couldn’t deliver. I thought it was going to be more, but in the end it’s better than nothing, so I think it helps no matter what.
According to the Department of Education, the student loan debt forgiveness application will be available in October and will take about four to six weeks to fully process.
Feature image courtesy of Sasun Bughdarian.