Biden’s Student Loan Policies and its Implication for Students in the USA

The cost of tertiary education in the USA can be exorbitant hence the need to take out loans as a student. To successfully complete your education, you can take out student loans from different institutions and set up a loan repayment plan depending on your financial capabilities. As of 2023, over 43 million Americans collectively owe nearly $1.6 trillion in student loans. President Joe Biden’s administration has made significant efforts to address the mounting student loan debt crisis in the United States.

The student loan debt in the United States has skyrocketed over the past few decades, reaching over $1.7 trillion and affecting approximately 44 million borrowers. The federal government’s involvement in student loans began in earnest with the Higher Education Act of 1965, which aimed to make college more accessible through federally funded loans and grants. Since then, the landscape of student lending has evolved, with increasing reliance on loans as grant funding has stagnated.

The burden of these debts has far-reaching consequences, impacting economic mobility, delaying homeownership, and contributing to financial insecurity among young adults. Addressing this crisis has been a central issue for policymakers, with various proposals put forward to mitigate its impact.

Biden’s Campaign Promises

During his presidential campaign, Joe Biden made several promises regarding student loan debt relief. Key components of his campaign platform included:

1. Immediate Forgiveness of $10,000 in Student Debt: Biden proposed canceling $10,000 of federal student loan debt per borrower as an immediate measure.
2. Forgiveness for Public Servants: Enhancing and simplifying the Public Service Loan Forgiveness (PSLF) program to ensure more efficient debt relief for those working in public service.
3. Income-Driven Repayment Plans: Revamping income-driven repayment plans to be more generous and easier to navigate.
4. Free College Initiatives: Supporting tuition-free community college and making public colleges and universities tuition-free for families earning less than $125,000 per year.

Specific Programs and Adjustments Under Biden’s Administration

The Biden administration has introduced or modified several programs to provide more relief and benefits to borrowers. Here’s how to qualify for these specific programs:

Public Service Loan Forgiveness (PSLF): The PSLF program forgives the remaining balance on Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

Eligibility Requirements:

1. QualifyingEmployment: Work full-time for a government organization at any level (federal, state, local, or tribal), a not-for-profit organization, or other qualifying employers.
2. QualifyingLoans: Only Direct Loans are eligible. However, under the limited PSLF waiver, payments made on other types of federal student loans can count if they are consolidated into a Direct Loan.
3. QualifyingPayments: Make 120 qualifying payments under a qualifying repayment plan.

Temporary Expanded PSLF: The Biden administration introduced a waiver allowing borrowers to receive credit for past payments that were previously not counted. This waiver is available until October 31, 2022.

Income-Driven Repayment (IDR) Plans: IDR plans set your monthly student loan payment at an amount intended to be affordable based on your income and family size.Most Direct Loans qualify for IDR plans and payments are based on your discretionary income and family size.

Changes Under Biden:

• Proposed capping monthly payments at 5% of discretionary income (down from 10%).
• Forgiving remaining balances after 20 years for undergraduate loans and 25 years for graduate loans.

Targeted Loan Forgiveness: The Biden administration has implemented loan forgiveness for specific groups, including:

• Borrower Defense to Repayment: For borrowers defrauded by their schools. Simply submit an application at Borrower Defense to Repayment.
• Total and Permanent Disability (TPD) Discharge: For borrowers with total and permanent disabilities. Submit an application at “TPD Discharge”.

Free Community College and Funding for HBCUs/MSIs: While the proposal for free community college did not pass in Congress, the Biden administration continues to support funding for community colleges, HBCUs, and MSIs. To qualify, you must enroll in a participating community college for any available scholarships or funding. You can also enroll in an HBCU or MSI to benefit from increased funding and support programs.

Challenges and Criticisms

Despite the steps taken, Biden’s student loan policies have faced various challenges and criticisms:

1. Partial Relief: Critics argue that the relief measures are insufficient and that broader debt cancellation is necessary to address the scale of the crisis.
2. Implementation Issues: There have been significant bureaucratic hurdles in implementing forgiveness programs, particularly with the PSLF program, which has faced criticism for its complexity and high rejection rates.
3. Political Opposition: Republican lawmakers and some moderate Democrats have opposed large-scale debt cancellation, arguing it is unfair to those who have repaid their loans and that it does not address the root causes of rising college costs.

Future Prospects and Legislative Efforts

Looking ahead, the Biden administration is expected to continue pursuing both administrative and legislative solutions to address student loan debt. Key areas of focus include:

• Working with Congress to pass comprehensive student loan reform and higher education funding bills.
• Utilizing executive authority to implement further relief measures where possible.
• Addressing the root causes of rising college costs and improving the affordability and accessibility of higher education,

How to qualify for the Biden student loans

Federal student loans are the most common type of student aid, and they include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans. The Biden administration has made several changes to make these loans more accessible and manageable.

Basic Eligibility Requirements

To qualify for federal student loans, you must:

• You must be a U.S. citizen, national, or eligible non-citizen (such as a permanent resident).
• You must have a valid social security number which is necessary for application and identification purposes.
• You must be enrolled or accepted for enrollment in an eligible degree or certificate program at a participating institution and maintain satisfactory academic progress as defined by your school.
• You must have a high school diploma, General Educational Development (GED) certificate, or have completed a high school education in a home school setting approved under state law.
• For interested male applicants between the ages of 18 and 25, you must register with the Selective Service System.
• You must not be in default on a federal student loan or owe a refund on a federal grant.

Application Process

1. Complete the FAFSA: The Free Application for Federal Student Aid (FAFSA) is the key step in applying for federal student loans. It determines your eligibility for federal aid, including loans, grants, and work-study programs. Visit FAFSA.gov to fill out the form and provide some financial information such as tax returns, bank statements, and other financial records.
2. Review Your Student Aid Report (SAR): After submitting the FAFSA, you will receive a Student Aid Report summarizing the information you provided. Review it carefully for accuracy.
3. Accept Your Financial Aid Offer: Your school will send you a financial aid offer, which may include federal student loans. You can accept all, part, or none of the loans offered.