Which people get student loan forgiveness?
NASHVILLE, Tenn. (WSMV) - The Biden Administration officially announced they’re canceling student loan debt for most borrowers.
According to Education.org, this will include the countless borrowers across Tennessee - owing a combined 31 billion dollar
People who make less than $125,000 a year will have $10,000 dollars forgiven from their loans. Pell grant recipients can receive up to $20,000.
President Biden announced the nation’s largest loan education debt on record Wednesday afternoon.
The policy has received criticism on both sides of the conversation.
Brent Evans - a public policy professor at Vanderbilt - says the plan is a big deal for people who have been held back by crippling debt.
“One it potentially allows students to now use that money to know purchasing a home for gaining wealth in other ways we know that homeownership is a large portion of people’s wealth by the time they retire and so it potentially allows them to invest earlier in that,” said Evans.
In addition to that, he says it levels the playing field in places where there have been inequities in the past.
“For example, black students have disproportionately burdened with student loans and low-income students have disproportionately been burdened with student loans relative to upper-income families and so this provides some opportunities for that to have a more equal starting point after they have left higher education.,” said Evans during a video conference interview.
Some critics of the plan say the policy is unfair to those who have already paid off their debts, while others say the income threshold is too high.
“I think the question is 125,000 dollars maybe too high of limit from a public policy standpoint. If a couple is making $250,000 a year jointly, they need 10,000 worth of debt forgiven when they could easily afford to pay a couple of hundred dollars per month which would entail over 10 years. And I think a lot of the debate will be around this might not be the most efficient resource there could be better ways to target that money towards people that are really struggling and need it as people in the middle to upper-income tiers may not need that sort of debt forgiveness,” said Evans.
It’s estimated that nearly 90 percent of borrowers earn less than 75 thousand dollars per year.
But some economists think the plan will make inflation worse.
“I do think the Biden administration is running a risk of accelerating inflationary pressures because people are going to have money to buy other things with. And I think that’s the risk that the risk they decided they’re willing to run knowing that this is canceling a lot of debt is going to be beneficial too a large number of students in a lot of ways,” said Evans.
It’s important to note, that this loan forgiveness policy applies to borrowers that have already borrowed money before July 1.
It does not necessarily apply to new borrowers moving forward. The Biden Administration says you’ll have to apply to have your debts forgiven as soon as we learn how to apply we’ll post the information online.
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