President Joe Biden has announced forgiveness for student loan borrowers making up to $125,000 a year. The president announced the plan Wednesday morning.
The White House says the cost of public and private four year universities has tripled since 1980, and Pell Grants that would have covered 80% of the cost then now will only pay about a third of the cost.
The Biden Administration says the Department of Education will now cancel up to $20,000 in debt cancellation for people with Pell Grants and up to $10,000 in debt cancellation for other loans. The cancellations will be available for people making less than $125,000 a year.
The pause on federal student loan repayment will also be extended to the end of 2022. Those with federal loans will also be able to cap payments at five percent of their monthly income.
At TCU, some students welcomed the news.
"I have had to talk to my parents about taking out loans for a while after this," one said.
"This definitely could go a long way for progression of individuals," another said. "Ultimately, this helps us long-term, too, because for our futures and our careers, we don't have that excessive debt."
But others say students and their parents should understand the terms of a loan before they accept any money.
"I understand that side. You know what you're getting yourself into," a student said.
"I've already paid off my loans, but that's great for kids who don't have loans paid off," a graduate student said.
The government says Americans have a total of $1.6 trillion in outstanding federal student loan debt. The non-profit, Committee for a Responsible Budget, says, if $10,000 per student is canceled, debt would return to $1.6 trillion within four years.
"Importantly, these projections assume no change in borrower behavior. In reality, debt cancellation would likely lead to increased borrowing, slower repayment, and larger tuition increases as borrowers and schools would expect another round of cancellation in the future. Any behavioral changes would mean the portfolio would return even faster to its current size," the organization says.
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