What Biden’s Student Loan Forgiveness Plan Means for BU Students
What Biden’s Student Loan Forgiveness Plan Means for BU Students
Reaction from students ranges from joy to relief: “That’s incredible to me,” one senior says
As economists and lawyers continue the fierce debate over President Joe Biden’s plan to cancel student-loan debt, and political candidates argue over its fairness and timing, there’s at least one group that’s ignoring the noise and simply rejoicing: students.
“I’m really happy about it,” Bianca Pokrzywa (CAS’23) says of the debt forgiveness plan. “As someone who’s not going to be making $125,000 out of college, this is a huge relief. Half my loans are going to be gone—that’s incredible to me.”
Biden’s announcement last week is “great news for borrowers,” says Christine McGuire, Boston University vice president and associate provost for enrollment and student administration.
“Many people will have their debt completely eliminated, especially if they were Pell Grant recipients as undergraduates,” says McGuire, who oversees student financial assistance at BU. “Although loan payments have been on hiatus since the beginning of the pandemic, the burden of the debt has remained a stressor. This announcement is a great relief for so many.”
The plan would forgive up to $10,000 in federal student loans for borrowers who make less than $125,000 a year, or less than $250,000 a year for families. For people who received Pell Grants—federal aid that’s awarded to undergraduate students who display exceptional financial need—the federal government would cancel up to $20,000 per borrower.
Current students and borrowers who meet the income requirements and whose federal loans—including undergraduate, graduate, and Parent PLUS loans—were fully disbursed by June 30, 2022, are eligible for forgiveness. That means that people who never finished a degree or students who are still in school can have their federal loans forgiven, as long as those loans were taken out before the end of June. Loans taken out after June 30, 2022, won’t qualify for forgiveness under Biden’s current plan.
The Department of Education offers a number of income-driven repayment plans for borrowers whose income is within a certain percentage of federal poverty guidelines.
People with federal student loans will need to fill out an application to have their debt canceled. Borrowers can sign up to receive emails from the Department of Education notifying them when the application is available, which should be in early October. Biden administration officials recommend that borrowers apply by November 15, in order to have their loans canceled before repayments start up again on January 1, 2023.
“This is huge,” says BU Pell Grant recipient Aysah Dalton (CAS’23). “I already have $50,000 in student loans as a senior, and that’s not including any private loans I’ll need to take out for grad school. So this really helps tremendously.”
Meanwhile, even students who aren’t currently carrying any federal student loans say they support the plan, because of what it means for others.
Maya Pensa (CAS’23) is one such student. Her parents have been able to pay for her undergraduate education, but she’s grateful for the debt-relief plan because she knows so many people for whom this is “a game-changer,” Pensa says. “I have family, friends, relatives—all these people who are so relieved.”
The White House estimates that roughly 43 million student-loan borrowers are eligible for forgiveness, and some reports estimate that half of those borrowers could see their debt completely wiped out. In addition to the blanket forgiveness, Biden’s plan extends the pause on loan repayments for four months, until December 31, 2022, and reduces the amount that lower- and middle-income borrowers will need to repay each month.
The plan would cap borrowers’ monthly payments to just 5 percent of their discretionary income, a decrease from the current 10 percent cap. It would also cancel loans after 10 years of payments, as long as the loans are $12,000 or less by that point. And it would cover the borrower’s unpaid monthly interest—a clause that McGuire describes as “one of the best aspects of the new income-driven repayment.
“That should prevent loan balances from increasing when using an income-driven repayment plan,” she says. “Very few former BU students find themselves in this situation, but for those who do, it is a better safety net than the existing income-driven plans.”
Biden’s plan, which is in the form of an executive order, still faces hurdles: it may very well be challenged in court, according to one BU law expert, who questions the legal arguments the White House used in explaining the executive order. Being debated in political circles is the timing of the announcement, with some Republicans arguing Biden was trying to influence voters before November’s midterm elections.
In the meantime, this last extension of the pandemic-era moratorium on loan repayment offers welcome relief for many borrowers, McGuire says.
“This final extension, coupled with the reduction or elimination of loan balances, should allow borrowers to breathe a bit easier in meeting monthly expenses,” she says. “For those who might soon find themselves with some extra cash on hand each month, they should consider redirecting those funds into a savings or investment account.”
We just borrowed a hefty amount for my son’s undergrad education. We’re a middle class family. I work two jobs, my wife works one. Not one dime of that is eligible for this “forgiveness” program. My son (and his parents) will be on the hook for his loan just like we’ll be on the hook for everyone else’s who scored this forgiveness.
Build back better indeed!
You’re not “on thee hook” for anything. Do you think you’re getting a bill? This is just a GOP talking point. No need to repeat it.
Unfortunately our society has broken apart so badly that it’s impossible to help those who really need it without others claiming it’s unfair to them. This is a good small step.
Wow Tommy… where do you believe the loan forgiveness money will come from…? “Immigrant’s” comment is certainly not a GOP talking point… if you truly analyze it objectively, you may come to a different conclusion and realization… best of luck
I am not a republican and I don’t blindly repeat anyone’s talking points. If you believe that the money comes out of thin air and not from people like myself who came to this country willing to work multiple jobs, I can tell you lots of stories about my old country. None of them had a good ending.
Rex, If you listen to the GOP and far right media on this topic, you will realize it is a GOP talking point. They recite it endlessly.
You probably agree that nobody is getting a bill, so you must think that taxes will have to go up to make up for $ not going to the Gvt. Nope, won’t happen. The USA is monetarily sovereign and creates $ with a keystroke. No need to take those $ from poor students.
Except we will be getting “the bill” any time we purchase something once this passes. Either the money created “with a keystroke” devalues what we’ve earned, or the only other option is we pay more out of what we’ve already earned to cover it. There are no alternate ways to pay for something like this when the government volunteers you.
Maybe people would be more willing to help each other if the private industries and institutions didn’t immediately take advantage of these types of steps by raising their costs and negating the bail out in the first place. Look what happened with the EV credit and the raise in EV prices.
What a pandering disgrace this is to hard working class Americans. BU has been raising money for their endowment for seven years, why not use that to forgive student debt. The contributions mostly come from their wealthy alumni so wouldn’t that correlate to letting the rich pay their fair share? Why put this debt on the backs of blue collar workers that never pursued “higher” education but work hard everyday to make ends meet. Why does BU continue to raise tuition well above CPI while the ROI on salaries upon graduation do not rise commensurate with the tuition increases. BU just took a 4.25% hike, highest in 14 years and President Brown remains one of the highest paid President’s earning more than $1.6 million/yr. Higher education has become purely a business to enrich educators that indoctrinate instead of educate. Pretty sad and disappointing evolution of so called higher education. By the way, when I graduated from BU in the 80s, I took my first car loan of $12,000 while earning just over $14,000 as an military officer. I paid that loan back in 4 years at 8.9% interest. So, when I hear an income of less than $125,000 can’t pay back $10,000, that wreaks of entitlement and laziness.
Yes, but when you went to school hot dogs were also a nickel.
It’s the ratio of loan to income paid off – that’s the point.
Isn’t it peculiar that the age group with the lowest approval rating for Pres. Biden is 18-34? (The very group with student loans) Seems like a clever way to buy some votes to me… with taxpayer money…