CU students react to Biden debt cancelation
Students at the University of Colorado Boulder are expected to receive student debt forgiveness in the coming months.
On Aug. 24, President Biden announced he would be taking a huge step to address student debt by canceling $10,000 to $20,000 in student loans for qualifying borrowers.
To qualify for $10,000 in debt cancellation, people with student loans have to make under $125,000 a year in income. Students who have received the Pell Grant will be eligible for an additional $10,000 in debt forgiveness.
Loans that were disbursed by June 30 of this year will be eligible for the relief plan. However, only federal student loans will be eligible. This debt forgiveness will target the 90% of the population that is earning less than $75,000 and the 20 million Americans that have taken out federal student loans.
This news leaves many to question when they will be able to apply for the student loan forgiveness plan. Within the plan, roughly eight million borrowers who have recently sent income data to the Education Department will not have to apply at all, and the money will be automatically applied to their federal student debt.
While there is not a clear timeline on when the debt forgiveness will happen, applications are expected to open in early October. To prepare for the application, people with student loans will be able to set up contact information within their student aid account. Applications to have the debt removed will close Dec. 31.
Under the American Rescue Plan of 2021, student debt forgiveness will remain tax-free through 2025. People who do not qualify for the student debt plan will still have their student loans payments paused until Dec. 31. Those payments will resume in January.
The relief plan will cancel up to 20 million people’s student debt. In addition, the interest rate on loans will be cut from 10 percent of borrowers’ income to 5 percent, further decreasing the amount of money people will owe for their student debt.
The forgiveness plan will likely benefit many Americans, as people are now finishing their undergraduate degrees with around $25,000 of federal student loan debt on average. In total, this adds up to about $1.6 trillion of student debt nationwide.
Amira O’Dell, a junior at CU, said she expects the plan will help her greatly.
“I knew I would be graduating with student debt, but knowing that I will be getting some of my loans will be extremely helpful,” O’Dell said.
Kendall Tinianov, a senior at CU, said, “Biden is finally making the move towards removing student debt. Maybe in the past it was feasible for individuals to pay off their loans, but nowadays college is so expensive that the debt sinks you so fast.”
The plan has caused some controversy, and many Republicans have called it an irresponsible way to remove debt, believing that taxpayers should not be responsible for paying student debt back. Still, student loan forgiveness is still set to move forward, and Biden has stood behind the policy even in the face of criticism.
“The outrage over helping working people with student loans is dead wrong,” Biden said in a statement at the White House.
