In August, President Joe Biden and his administration devised a three-step loan forgiveness plan to help pay off up to $20,000 of college debt for eligible Americans.
The plan aims to prevent the cost of college from weighing down Americans with debt and help current and past college students already in student loan debt.
“I’m glad they’re doing something about it,” senior Spriha Pandey said. “[Even if] each system isn’t totally fair.”
The first step of the plan provides individuals with income less than $125,000 and married couples with incomes less than $250,000 with $20,000 in debt cancellation if they took advantage of the Pell Grant. Non-Pell Grant recipients will receive $10,000 in debt cancellation, according to a statement published by the White House.
Pell Grants are federal grants given to college applicants without a degree who display an extreme need for financial help.
The typical undergraduate will graduate with $25,000 of debt, according to the Department of Education. Grants used to cover up to 80 percent of tuition, but have diminished to cover only a third of the cost to attend college.
Step two focuses on fixing the current Public Service Loan Forgiveness (PSLF) program. It advocates for PSLF to give automatic credit toward some loan forgiveness to citizens working in nonprofit, military, federal, state, tribal, or local government services.
The final step aims to make community college tuition free and to hold all colleges accountable for keeping tuition prices reasonable. The goal is to ensure that students receive the best value and education for their money.
Senior May Tijero believes that the plan is necessary and positive.
“[The plan] is good because I don’t think that education is something that should have a price tag on it,” Tijero said.
On the other hand, senior Mihir Arya believes that people need to be more financially responsible when it comes to college loans.
“If you choose to take out a loan, you need to pay it back,” Arya said. “The price might not change [for current high schoolers], but the possibility of forgiveness could influence the mindset surrounding higher education and incentivize more people to pursue higher education.”
Current Cal students should not expect the loan forgiveness plan to help them because the debt cancellation only applies to people who have already taken out student loans.
The window to apply for help closes at the end of 2022 before some seniors even finish submitting applications. It’s predicted that 21 percent of recipients affected are 25 years and under, while 44 percent are ages 26 to 39, according to a White House fact sheet.
Tijero believes those who have already been through college need the loan forgiveness the most.
“I feel like you should start with the people that have debt first,” Tijero said. “ That makes sense.”
According to an estimate by the Wharton Budget Model, forgiving $10,000 per person applicable would create an additional $519 billion in federal deficit. Forbes analysts agree that forgiving student loans will increase the deficit.
Cal’s college and career counselor Kathryn Nichols expressed concern for the potential negative impacts of the plan on the local economy.
“You’re trying to figure out, how do I pay my rent, my food, all my other expenses, and have a little percentage that‘s also going to pay back my student loans,” Nichols said. “But meanwhile that money is the money that could have been used for something that goes into your local economy as well.”
Spending on the plan could cut funding from other policies the Biden administration had promised, including eliminating free and reduced lunches and raising the age senior citizens become eligible for full Social Security, according to the Congressional Budget Office. Proposed laws such as guaranteed parental leave could also be cut.
Nichols expressed additional concern regarding the potential elimination of programs such as parental leave and their impact on the Cal community.
“That’s a real problem because that’s addressing an entire other part of the population that could very well be this population,” Nichols said.
Taxes will be raised in order to raise funding. The plan will run on a progressive income based tax system, which means that the more income a person makes the more they will have to pay for other people’s student loan forgiveness, according to the National Taxpayer’s union.
The wealthiest Americans paying the most money won’t be eligible for aid.
According to the National Taxpayers Union, the average amount a U.S. taxpayer will pay toward student debt cancellation will be $2,503.22. An additional $11,940 would be contributed by those making between $200,000 and $500,000, bringing the total for those taxpayers to nearly $14,500.
Cal High government teacher Alex Geller said the plan will help him but will exclude some people, including current students.
“It’s unfortunate that people who already paid off their debt won’t benefit from [the plan],” Geller said.
Geller also said Biden’s plan will help him greatly as someone with student loan debt, but he believed the new taxing system to pay for it can be seen as both fair and unfair.
According to Forbes, many professional analysts, as well as citizens including Geller, speculate that colleges and universities will increase the prices of tuition to balance against the loss of money from Biden’s plan.
If that happens, students currently unable to apply for loan forgiveness would have to spend more on their college education in the coming years without a guaranteed chance at future loan forgiveness or debt relief.