Kirill Krasilnikov-US President Joe Biden’s initiative to forgive at least USD 10,000 in student debt for each eligible borrower will not be enough to improve the situation with higher education in the United States, experts and citizens surveyed by Sputnik believe.
Earlier in the week, Biden announced that the US government will forgive up to USD 20,000 for individuals who took out Federal Pell Grants, while individuals who took out regular federal loans could get up to USD 10,000 in debt cancelled.
. According to the Department of Education, the Biden administration’s student debt relief plan will require borrowers to pay no more than 5 per cent of their discretionary income each month for undergraduate loans, down from the previous 10 per cent . The plan will also cover the borrower’s unpaid monthly interest as long as they make their monthly payments.
According to the Department of Education, the Biden administration’s student debt relief plan will require borrowers to pay no more than 5 per cent of their discretionary income each month for undergraduate loans, down from the previous 10 per cent . The plan will also cover the borrower’s unpaid monthly interest as long as they make their monthly payments.
The student loan forgiveness program will only apply to individuals who earn an income of less than USD 125,000 a year and will guarantee that no borrower making the annual salary based on USD 15 minimum wage will have to make a monthly repayment.
In addition, the plan will forgive loan balances of USD 12,000 or less for each borrower after ten years of payments.
The federal government’s involvement in student loans goes back to the late 1950s when the launch of the Soviet artificial satellite Sputnik 1 prompted the US to step up its science and technical education through low-cost loans to students in mathematics, science and foreign languages under the National Defense Education Act of 1958.
This was later expanded in the 1960s as part of Lyndon Johnson’s Great Society initiatives, resulting in the arrangement where the government serves as a guarantor of loans made by banks and other private lenders to students, covering losses if a borrower defaults.
Since then, the price of college tuition skyrocketed due to rising demand for higher education and also, as many people claim, due to government-subsidized student loans, which allegedly caused universities to start raising tuition prices and fight to enrol as many students as possible. Now, the overall federal student loan debt has reached $1.6 trillion, with many US citizens being saddled with an exorbitant amount of debt and degrees that do not translate to incomes that would allow them to repay it.
As a result, there have been calls to change the current arrangement, with some insisting on universal forgiveness of student debt and others objecting, saying it would be unfair to those who had already repaid their debts.