The Biden Administration’s flawed attempt at loan relief

Rising debts spark pivotal yet underwhelming changes in repayment

Jackie Marquez/ Asst. Opinion Editor/ The USD Vista

The dream of lecture halls, overnighters and dining hall food currently stands behind a paywall. For many students pursuing the college experience, financial aid in the form of scholarships and grants do not cover the rising cost of attendance. The solution? Taking out exorbitant student loans. As a result, student debt in America is stifling opportunities for new graduates.

As America nears the end of the pandemic, student debt repayment is now a critical issue. Although the U.S. Department of Student Aid paused payments for eligible loans on March 13, 2020, this pause was extended through Dec. 31, 2022, and loan repayment is a looming reality for  borrowers once again.

Given the harsh reality of college debt and repayment, the Biden Administration must follow through on long-term solutions. The pandemic worsened the financial stress of paying for college, but the pandemic is not the only reason that paying off debt is challenging. To truly alleviate the student debt issue, the government must target systemic issues such as rising tuition and dependence on loans. However, based on their proposed action plan they are not prepared to do so.

Seeking to ease students and graduates back into repayment, the Biden Administration announced a three-part plan which will  target loan repayment. The first part introduces a student debt cancellation program that will cancel up to $20,000 in loans for Pell Grant recipients and up to $10,000 in loans for Non-Pell Grant recipients. Pell Grants are federal grants given to undergraduate students who show exceptional financial need in order to help offset college costs.

This cancellation is a one-time relief, not something that borrowers can apply for every year. It applies to both current students and recent graduates, and the application will open sometime in October. Borrowers are eligible for debt cancellation, if they make less than $125,000 individually or less than $200,000 if married.

The second part entails a change in how loan repayment will work after the end of the repayment pause. It includes a new, income-based repayment plan that would max out payments at 5% of the borrower’s income. There is also an attempt to fix the Public Service Loan Forgiveness program, a program that intends to credit public servants through loan forgiveness.
These first two plans of action are a great start. Both the loan cancellation and the new repayment plan lighten the burden that borrowers carry. They are a step in the right direction.

Despite this effort, there are still flaws in this debt relief plan. The cancellation amount is unsatisfactory, and the plan itself is a short-term fix. According to Forbes, the average amount of American student loan debt in 2022 is $28,950 per borrower. According to the USD Tuition and Financial Aid Page, the average student debt upon graduation is $27,020 at USD. The maximum amount of forgiveness a borrower can qualify for is $20,000, but many will only qualify for $10,000 because they did not receive a Pell Grant. This leaves the average borrower with $8,950 to $18,950 in debt. This is still a sizable amount of debt, especially considering that there are many Americans who take out more than the average amount of loans.
The loan cancellation is a limited offer; after the loans are canceled, it’s back to business. This aid provides only a fragment of relief for students who are already in debt, but it does nothing for the prospective students who will inevitably go into debt in the years to come. It is an inadequate attempt to win over young,   educated voters, not the solution to systemic issues that we need. While $10,000 in relief is better than nothing, the Biden Administration must continue to develop a long-term debt forgiveness plan that will go beyond a one-time relief.

Although the first two parts of this plan begin to prepare students and graduates for the loan repayment, the third is unsatisfactory. This final part seems to be a vague promise to increase the Pell Grant maximum and decrease the cost of community college. According to the White House’s Briefing Room Fact Sheet, “To further reduce the cost of college, the President will continue to fight to double the maximum Pell Grant and make community college free… This Administration has already taken key steps to strengthen accountability.”
This is the kind of legislation we need, however these promises are currently nothing but promises. The White House attempts to recognize these problems by mentioning the insufficient maximum Pell Grant amount and the ever-rising cost of tuition.

Yet, they fail to provide concrete legislation that addresses these issues. They also fail to explain the steps that have already been taken to achieve such promises.
These problems ultimately reflect a shortcoming of the relief plan: an inability to account for longevity. This plan starts strong, it details concrete approaches to easing borrowers back into repayment. However, when it comes to long-term solutions, this plan does very little to alleviate the systemic problems that are causing the debt crisis. Unless the Biden Administration devises more tangible solutions, tuition will continue rising, Pell Grants will keep failing to cover costs of attendance, and loans will still be the primary form of financial aid.
The White House attempts to recognize these problems by mentioning the insufficient maximum Pell  Grant amount and the ever-rising cost of tuition. Yet, without concrete legislation, these issues will continue to plague American students.

The Biden Administration needs to follow through on their promises with additional legislation. For instance, legislation that would set a price cap on tuition, to block universities from continuously upping their price tag is imperative.

According to the University of San Diego Undergraduate Educational Costs Page, USD tuition has increased by $1,690 from the 2021-2022 school year to the 2022-2023 school year alone. This tuition increase is not unique to USD; The tuition for Santa Clara University increased by $1,656 from the 2021-2022 school year to the 2022-2023 school year and Loyola Marymount University tuition  increased by $2,374. The above graphic  from the U.S. Department of Education captures the rise in tuition in comparison to the rise in federal Pell Grants.

It is  evident that an increase in cost is not matched by an increase in grant value.  An increase in the Pell Grant maximum is necessary, especially for USD students who are experiencing rising costs first-hand.

What the American college student needs is a proactive and preventative solution, not a treatment of surface-level symptoms. We need legislation intended to stop the debt crisis at its source, and it must be more sustainable than a temporary debt cancellation and vague promises of change. While a good start, this loan debt relief is not the end of the road for change to the college financial aid system, and we as young voters must push for our needs to be represented.