Applications are now officially open for Biden’s student loan forgiveness program, but debt relief discharge is paused as of October 21 after a federal court of appeals placed a temporary hold on the program following a joint lawsuit from legal representatives from Missouri, Arkansas, Kansas, Nebraska, South Carolina and Iowa.
The lawsuit argued Biden’s actions were an overreach of his powers and that it would unfairly decrease revenue for student loan providers, such as MOHELA in Missouri.
In response, Biden scaled back the program to exclude borrowers with privately-held loans. According to CNN, this change will affect 770,000 people.
Biden initially announced this plan in August, at which point he also extended the federal moratorium on student loan repayment through the end of December. The program allows for up to $10,000 in loan forgiveness for people earning less than $125,000 annually and up to $20,000 for Pell Grant recipients.
In an email to The Michigan Daily, University of Michigan spokesperson Rick Fitzgerald said while the legal stance of the program is in flux, students can still take advantage of federal resources to keep up to date on the status of debt relief.
“The landscape is changing rapidly regarding the Federal Student Debt Forgiveness program with ongoing legal challenges,” Fitzgerald wrote. “At this time, anyone who is interested in applying should look for information and updates at studentaid.gov and complete the required application. There are no special directions or considerations for U-M students or alumni.”
Katherine Michelmore, associate professor of public policy at the University, said she believes this program is an important first step toward higher education reform, especially for those who take on student loan debt but do not ultimately graduate.
“We’ve seen a growing number of students graduating with debt, and I think a bigger concern is actually students who start college and take on some debt for that, but then they don’t actually go and finish those degrees,” Michelmore said. “I think this policy that Biden has announced is actually going to do a lot for those students because those students tend to have small amounts of debt, but they don’t have the degree to show for it.”
In his announcement, Biden also emphasized that loan forgiveness specifically helping Pell Grant recipients will help advance racial equity, as Black students are twice as likely to receive Pell Grants than their white counterparts. There is also a pronounced racial disparity in who takes out student loans more generally, with Black students owing an average of $25,000 more in student loans than their white counterparts.
The U-M chapter of College Republicans said in a statement to The Daily they feel Biden’s loan forgiveness program places an undue burden on American taxpayers, especially those with no connection to higher education or student loans.
“President Biden’s decision to cancel $10,000 in student debt is simply feel-good theater,” the statement read. “Over half of the US population never attended college yet will have to bear the brunt of an education they never received.”
Michelmore said she believes the move counters a recent disinvestment in higher education that necessitates these programs.
“I think as a country, we’ve disinvested a little bit in higher ed,” Michelmore said. “One common argument you hear is people from older generations say, ‘When I was in college, I worked through college, I was able to pay my way.’ And that’s just not the landscape anymore. It’s not feasible for someone today to be working a part-time job and being able to cover their tuition costs. Costs have increased so much that it’s just not possible to do that. And so I think, as a society, we have to think about what we value.”
Law School student Robert Edwards, treasurer of the Education Law and Policy Society at the University, said while this program will help address the cost of higher education for many students, he wants to see more action taken to address rising tuition costs.
“The changes that this program adopts will make higher education more affordable over the long term for students, but there isn’t much reason to think that it will address the actual cost of higher education, which has skyrocketed over the last 50 years,” Edwards said. “I think more needs to be done to consider how to bring that cost down or at least keep it from continuing to go up because as it stands, it’s kind of a runaway train.”
In addition to the loan forgiveness plan, the Biden administration also announced plans to modify the pre-existing Public Service Loan Forgiveness (PSLF) program, which cancels any remaining federal student loans for public sector workers after 10 years of payments.
Michelmore said she believes expanding PSLF would build on the momentum of the one-time loan forgiveness program and address existing issues with federal debt relief programs.
“I think the problem with a lot of those programs is there’s a lot of red tape,” Michelmore said. “We’ve heard stories where, for instance, teachers get kicked out of these loan forgiveness programs because they didn’t submit their paperwork on time, or they submitted it but they had something incorrectly filled out. So I think we need to make it easier for folks to be able to become eligible for these programs.”
Michelmore added that the 10-year requirement makes it more difficult to access debt relief and suggested restructuring the program to be eligible for partial loan forgiveness for each year of work in a public service role. She also pointed to income-driven repayment programs, which place a cap on the amount of debt people must repay based on their income, as another policy that could be expanded and improved upon.
In a statement to The Daily, the U-M chapter of Young Democratic Socialists of America said they hope the federal government will work toward complete debt relief for students.
“It is totally within President Biden’s power to eliminate all federally held student debt with a few pen strokes, and it is about time he started the process,” the statement read. “It is worth taking future aggressive action like President Biden’s executive order to put these systems into place if corporate interests will continue to prevent Congress from taking the action that is not only popular on principle but will continue to benefit all communities for generations to come.”
Correction 11/2: A previous version of this article stated all the states suing Biden are led by Republican governors. Kansas Governor Laura Kelly is a Democrat.
Daily Staff Reporter Samantha Rich can be reached at sammrich@umich.edu