After pledging student-loan cancellation during his presidential campaign, President Joe Biden fulfilled his promise Wednesday announcing a plan to relieve student loan debt. This comes as the pandemic-imposed pause on student loan payments is expected to end this December.
“For too long, students have shouldered overwhelming student loan debt just to get a fighting chance at the American Dream,” said U.S. Sen. Alex Padilla (D-CA) in a statement. “First-generation students and communities of color will now be able to better save for their future and build wealth. Young families will have more flexibility to pay for essentials like childcare, rent, transportation, and food. And tens of millions of Americans will be able to put more of their hard-earned paychecks back into the economy — benefiting everyone.”
According to a statement released by the U.S Department of Education, the department will provide Pell Grant recipients with up to $20,000 in relief and non-Pell Grant recipients with up to $10,000 in relief. Those earning less than $125,000 as individuals or $250,000 as a married couple will be eligible for the relief.
Cruz Grimaldo, campus associate vice chancellor for financial aid and scholarships, said in an email that on average about 30% of UC Berkeley undergraduate students graduate with loan debt after borrowing between $18,000 and $20,000 during their time on campus.
In 2020-21, 26% of all undergraduates received a Pell Grant, and in the last five academic years about 15% of graduate students per year received federal student loans with an average loan amount of about $40,000.
“Thousands of current UC Berkeley students and tens of thousands of UC Berkeley alumni will benefit from the Biden-Harris Administration’s action related to loan forgiveness,” Grimaldo said in the email.
Grimaldo stated that in order to support students who will be affected by the decision, campus’s Financial Aid and Scholarships Office will send “targeted communication” to current students who qualify and work to inform alumni of the debt relief plan.
Borrowers will be expected to claim the relief no later than when the pause on payments ends, according to the Department of Education’s statement. Additional changes include a proposal for an income-driven repayment plan as well as reforms and improvements for the Public Service Loan Forgiveness Program.
However, concerns about the decision have been raised including the possibility of worsening inflation and whether relieving student loans addresses the problem of college affordability. In addition, legal challenges may be raised against the decision in the future.
