The United States is grappling with a staggering student loan crisis, with the total debt reaching a staggering $1.75 trillion. This burden impacts approximately 40 million borrowers, many of whom have been granted temporary relief from payments due to the Covid-19 pandemic. However, as student loan payments are set to resume in October, anxiety among borrowers has heightened.
The Biden administration had proposed a plan to forgive $10,000 in student debt for eligible borrowers under a certain income threshold, with the possibility of up to $20,000 in relief for Pell Grant recipients. However, the plan was struck down by the US Supreme Court, leaving millions of Americans disappointed and concerned about their financial futures.
The court’s decision has drawn criticism from borrowers, who view it as a setback for those seeking relief from the burden of college debt. Progressive lawmakers and activists are now urging the president to present an alternative plan to address the issue of student debt.
Student loan debt in the US totals nearly $1.8 trillion: pic.twitter.com/5dnPXB2wrx
— unusual_whales (@unusual_whales) July 5, 2023
In response to the ruling, President Joe Biden outlined a new strategy to alleviate the impact of student debt. This approach relies on the Higher Education Act of 1965, which grants the education secretary the power to modify or release loans under specific circumstances. Additionally, Biden proposed a 12-month repayment program that would forgive late payments, protecting borrowers’ credit scores if they miss payments between October 2023 and September 2024.
While this alternative plan offers some hope for borrowers, it is acknowledged that it will take longer to implement and reach as many individuals as the original proposal. The mounting cost of college tuition over the past three decades has fueled the need for student loans, making education increasingly unaffordable for many. Public four-year college tuition costs have more than doubled, while private nonprofit institutions’ tuition has almost doubled when adjusted for inflation.
More than half of students graduate with debt, and the average borrower owes approximately $28,950. Federal student loans account for about 92% of all student debt, with the remaining amount consisting of private student loans. This pressing issue has prompted a call for reform and comprehensive solutions to alleviate the burden of student loans and make higher education more accessible to all.