On Day 1, President Biden extended the freeze on federal student loan payments and interest through September 30, 2021.
His $1.9 trillion Covid-19 relief plan, which is subject to congressional approval (Republicans will try to scale it down), does not include student loan forgiveness. However, “many experts predict he’ll use his executive power and legislative agenda to address student loan debt early in his term,” Time magazine says.
Executive actions, can do. Legislation, a tougher nut, and speculation. “Exactly what he’ll be able to achieve … is unclear,” Time says (read article here). Here’s what is thought to be on his wishlist:
- As a Covid-19 relief measure, cancel up to $10,000 of education debt for each borrower (applies only to federal student loans held by the Department of Education
- Free undergraduate tuition at public colleges and universities for students whose family income is less than $125,000 a year
- More generous repayment terms (see Time article for details)
- For borrowers paying through income-driven repayment plans, after 20 years any remaining debt would be canceled
- Changes to the existing public service debt forgiveness program (see Time article for details)
Student debt exploded after the 2008-2009 financial crisis (see graph below), partly because cash-strapped states cut back on support for state colleges and universities, which raised tuitions to make up the shortfall. Thus, a big chunk of traditional public support for higher education was transferred to students, which required them to borrow more. The federal government, with its greater resources, stepping in to alleviate a portion of this debt isn’t a giveaway; it merely makes these students whole in terms of restoring the status quo ante.
Some people resent paying taxes for higher education. However, it’s in our national interest to enable our best and brightest, not just children from families of means, to have educational opportunity. We need to reach farther down the income scale to get enough doctors, scientists, teachers, and engineers — most of whom come from the middle class and, increasingly, the economically disadvantaged strata of society.
If we are to remain a superpower, be militarily strong, and have a prosperous economy, we can’t afford to squander our human resources. Higher education also makes better citizens, who understand how our government works, and are capable of making responsible voting decisions. One of purposes of a college education is to teach critical thinking skills. After recent events, it’s hard to argue we don’t need more of those.
