Is there a downside to ambitious plan?
Being in debt can be mentally and financially draining. The Biden administration has done its best in attempting to rid billions of dollars in student debt nationwide, while significantly reducing some of this individual debt to half the amount due to various programs and grants. But what is the downside of forgiving this amount of debt in such a short time? Why are states against the loan forgiveness program?
"The administration has been able to forgive over $150 billion dollars of debt, even with the setbacks they faced earlier in the process, but it's still a long way to go," Adam Minsky, student loan lawyer, said. Minsky also credits the Hero's Act, coming into effect as a signifying change in the process and expediting the forgiveness plans and programs implemented by Biden.
The Health and Economic Recovery Omnibus Emergency Solutions Act, or Heroes Act, was proposed legislation acting as a $3 trillion stimulus package in response to the COVID-19 pandemic, intended to supplement the earlier CARES Act stimulus package. The bill for this Act of Congress was proposed by Representative Nita Lowey, a Democrat from New York, on May 12, 2020, and passed by the United States House of Representatives on May 15, 2020. On December 21, 2020, Congress reached a deal for a different $900 billion stimulus package via the Consolidated Appropriations Act.
Another program that has helped borrowers is the IDR account adjustment program. The IDR Waiver is a one-time account adjustment by the Department of Education. It gives federal student loan borrowers credit toward forgiveness. All Direct Loan program borrowers, including graduate and Parent PLUS Loan holders, will receive at least three years of credit toward forgiveness.
While the borrowers love their loans forgiven, states have a different opinion on the loan forgiveness program. "They have constantly supported the strike-downs of several loan forgiveness programs over the years stating that relieving borrowers of their debt puts the financial burden on the taxpaying residents and takes away from their state budget," Minsky said as he talked about why state leaders interfere with the programs or limit them. "The states don't have much of an argument to make as their current argument is that if people get loan forgiveness it lessens the want for them to get local state jobs to access the loan forgiveness program, which doesn't make much sense to me but hey they're trying their best I guess."
Even with the copious amount of debt forgiven, more than 45 million people owe nearly $1.7 trillion, and every 26 seconds, one of those student loan borrowers defaults on their loan.
