Dubbed a debt trap, student loan obligations plague millions of vulnerable borrowers falsely led to believe “useless” degrees would help them achieve high-paying careers.
PENNSYLVANIA STATE | In August, President Biden announced his plan to apply COVID-19 relief funds toward repaying up to $20,000 in student debt payments for Americans earning less than $125,000 a year.
1,717300 Pennsylvanians are eligible for student debt relief. This figure includes 988,800 who qualify for $20,000 in debt relief and an additional 731,000 who can have their federal loans forgiven entirely, according to the federal Department of Education (DOE). The plan will cost taxpayers an estimated $400 billion, according to the Congressional Budget Office. Approximately 95% of borrowers qualify for forgiveness, of which about 45% will have their debt completely wiped out. A report from the Brookings Institution found that black borrowers owe an average of $52,726 four years after graduation, whereas the average white borrower owes $28,006.
The Biden administration has issued the order, claiming that the Covid-19 pandemic qualifies under the 9/11 Heroes Act, which allows federal agencies to relieve or erase student loan debt during war or national emergencies.
On Sept. 29, 2022, six states, including Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina, filed a lawsuit in a St. Louis federal court, arguing the plan violates the federal Administrative Procedure Act because it was issued without congressional approval and is unconstitutional. They also argue that the Heroes Act does not apply here since the plan does not address the effects of the pandemic, which Biden acknowledged was over in a Sept. 19, interview with 60 Minutes, leaving its fate unknown.
The DOE will contact eligible borrowers in October. More information on the program is available at www.studentaid.gov/debtrelief.