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Biden announces billion-dollar plan to reduce federal student loans

President Joe Biden made steps toward fulfilling one of his campaign promises when he announced current students and college graduates could receive up to $20,000 in student loan forgiveness.

In an address on Wednesday, Aug. 24, Biden said the Department of Education would forgive $20,000 in federal loans for Pell Grant recipients and $10,000 for non-Pell Grant recipients. Only those who make less than $125,000 a year are eligible for either, except in the case of jointly-filing married couples who make less than $250,000 per year.

Livy Shaffer, who graduated from Miami in 2021 as a history and political science major and received Pell Grants during college, said the student loan forgiveness could help open options to those in debt from school.

“Especially for someone who came from a single-income household, it’s just more manageable,” Shaffer said. “It also allows me to look at, because I want to go to law school … that kind of thing rather than just worrying about getting out of debt.” 

During his speech, Biden said the U.S. was falling behind other countries in terms of higher education.

“For the vast majority of Americans, 12 years of universal education is not enough, and we’re going to be out-competed by the rest of the world if we don’t take action,” Biden said. “But here’s the deal: the cost of education beyond high school has gone up significantly. The total cost to attend a public four-year university has tripled, nearly tripled, in 40 years.”

As of 2019, 13% of Miami University students had received Pell Grants, which are given to students with high financial need. Although Miami ranked lowest for percentage of Pell Grants among Ohio public universities, several students will be impacted by Biden’s announcement.

In an email to The Miami Student, Brent Shock, vice president of Enrollment Management and Student Success at Miami University, wrote that while some students at Miami will be affected by the announcement, Miami won’t be in charge of the loan-forgiveness process. 

“Today’s announcement means that many millions of borrowers – including some Miami students and families – will experience debt relief,” Shock wrote. “There are many unanswered questions from the U.S. Department of Education about how this will work and who will qualify. Because Miami does not hold these loans, Miami will not be able to answer specific questions about eligibility or timelines for the forgiveness.” 

Shock advised students to visit the Federal Student Aid website to get more information. 

Laney McBean, a sophomore studying biomedical engineering at Miami, said she wishes the government would do more to reduce how much students pay for college. 

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“It’s probably the best that they could do because obviously the government is in a gridlock 24/7 so they can’t make drastic changes like we all want, but what they did still isn’t enough,” McBean said. “At the end of the day, so many other first-world countries have free college, so we should be able to figure that out.” 

Shaffer added that the announcement on Wednesday wasn’t enough.

“I think more needs to be done, but I don’t believe that’s the White House’s problem,” Shaffer said. “I think education reform and lower cost of education and more accessibility to higher education, especially for poor communities, is important, and that’s not something that student loan forgiveness will solve.”

The Committee for a Responsible Federal Budget estimates Biden’s plan to cost over $230 billion. In addition to student loan forgiveness, Biden announced the Department of Education will work to reduce the price of college, cut monthly undergraduate loan payments in half and fix the Public Service Loan Forgiveness program. 

Borrowers should be able to apply for loan forgiveness later this fall.