By Connie Lee and Samantha Padilla , Sept. 6, 2022
President Biden announced on Aug. 24, the U.S. Department of Education will provide a three-part plan to promise $10,000 in federal student loan forgiveness.
According to the White House, the three-part plan starts with providing debt forgiveness to individuals who were financially affected during the pandemic. Pell Grant recipients with borrowed loans from the Department of Education will be provided up to $20,000 in loan forgiveness. Borrowers who are not eligible for Pell Grant will receive up to $10,000 in debt cancellation. To allow repayments to be successfully adjusted, repayments have been paused until Dec. 31, 2022.
“Based on the news I’ve heard about President Biden forgiving student loans, I can honestly say that this is a huge relief and I’m excited to see how this is going to play out,” said Edgar Castañeda, a biology student. “I feel like this would definitely help our students like myself who are struggling to pay off large loans, while still attempting to manage our ability to afford our school tuition and fees.”
The second part of the plan is making sure the student loan system is affordable for undergraduates. By doing so, undergraduates will be paying half of monthly payments that will result in lowering more than $1,000 for future loan recipients. The final plan is to reduce the cost of college by increasing Pell Grants and making community college free.
In America, an estimated amount of $1.6 trillion of student federal loan debt holds a significant overload on students. Student loans are the most prominent form of consumer borrowing for higher education in the United States and have grown tremendously over the years.
President Biden’s plan will provide loan forgiveness to 43 million borrowers and cancel student debt for approximately 20 million borrowers, according to the White House.
With the recent student loan forgiveness announcement, several CPP borrowers have contacted FAFSA and questioned whether they are eligible for the forgiveness plan and would like to know how they are able to sign up for the process. The official FAFSA website crashed after President Biden’s announcement on the first three days of the proposal.
Federal loans will be forgiven after a process to qualify for the forgiveness plan. For borrowers already saved in the system, their loans will automatically be dismissed because their income information is already on file. However, those who aren’t in the system will have to sign up and see if they are eligible, such as providing information such as their annual income and how many loans they have.
“I feel like there’s always going to be a catch,” said Denise Benavides, a social work graduate student. “I’m glad we are being supported and some of the debt will be canceled, especially during today’s difficulties. I think it’ll also affect future generation students because the cost of tuition is increasing every year despite the inflation.”
The student debt cancellation will help over 8 million borrowers with 87% of student loan cancellation benefiting individuals whose annual income is less than $75,000 and 13% of the forgiveness will help borrowers with individual incomes from $75,000-$125,000.
“Finally. It’s something that our president has promised since he got elected,” said David Jimenez, CPP Office of Financial Aid and Scholarships counselor and graduate student. “I kind of figured it was kind of out the door and maybe over promised something that he couldn’t deliver. I thought it was going to be more, but at the end of the day it’s better than nothing so I think it’s the help no matter what.”
According to the Education Department, the student loan debt cancelation application will be available in October and will take approximately four to six weeks to process fully.