Biden's student loan forgiveness plan has minimal impact at East Central College

According to statistics from the college, 9 percent of the 2,593 students enrolled in classes in fall 2020 had federal student loans. They, along with more than 40 million other Americans, could qualify for up to $10,000 of forgiveness, as reported by the Associated Press. 

On Wednesday, The Missourian interviewed around a dozen ECC students and they were mostly supportive of Biden’s proposal, saying they knew siblings and friends who would benefit from the loan forgiveness proposal that only applies to people who earn less than $125,000 a year and only to debt accrued before July 1 of this year. An additional $10,000 is available to those who receive federal Pell Grants. 

Gruett said that many ECC students, over 500 in the past spring semester, have their education paid for by the state’s A+ program. This program, which was started in 1993, paid more than $700,000 for ECC students to attend the college that term. 

Nationally, the decision is an attempt to slow the increasing student debt experienced by students who attend public and private universities. In his Aug. 24 announcement, Biden also extended a pause on loan payments, this the “final time,” through January, according to the Associated Press.

“Both of these targeted actions are for families who need it the most: working and middle-class people hit especially hard during the pandemic,” Biden said from the White House.

It is estimated the debt cancellation, new repayment plan and payment freeze, will cost between $400 billion to $600 billion, according to the Committee for a Responsible Federal Budget, a nonprofit that advocates for lower deficits.

Most people will need to apply with the Education Department for the relief with applications being made available later in the year. About 60 percent of borrowers are recipients of federal Pell Grants, which are reserved for undergraduates with the most significant financial need, and about 20 million people nationally will have their debts entirely erased.

The forgiveness doesn’t apply to students currently enrolled at ECC who may plan on taking loans later in their education career, but Biden is proposing a separate rule that would reduce future monthly debt payments.

The new rule would require borrowers to pay no more than 5 percent of their earnings, down from 10 percent in existing plans. It would forgive any remaining balance after 10 years — down from 20 years now -— and raise the floor for repayments. Debtors earning less than 225 percent of the federal poverty level would not need to make monthly payments.

The rule does not need congressional approval, but could take more than a year to finalize.

Biden’s plan comes after long deliberating on a promise made in the 2020 presidential campaign. He faces criticism from Republicans and some Democrats, who questioned the plan’s fairness and said it does nothing to solve the debt crisis.

“Democrats are literally using working Americans’ money to try to buy themselves some enthusiasm from their political base,” Senate GOP leader Mitch McConnell said.

Ben Stafford, who is a retention specialist at ECC has about $28,000 in student loan debt from earning bachelors degrees in history and secondary education from the University of Missouri St. Louis in 2007 and 2015. On an income-driven repayment plan that sets 20 years of payments based on discretionary income, Stafford said he wished education hadn’t become so expensive in the first place.

“The entire system of financing public education is out of whack,” he said. “And without the increase in loans for students, colleges would never have been able to start charging as much as they have. They would have had to make college cost more reasonably for the consumer.”

Stafford is also frustrated with the complexity of the system to apply for the Public Service Loan Forgiveness Program, which Biden did not address in his announcement. 

Though the Justice Department released a legal opinion concluding that the Higher Education Relief Opportunities for Students Act gives the education secretary the “authority to reduce or eliminate the obligation to repay the principal balance of federal student loan debt,” lawsuits are likely. The Job Creators Network, which promotes conservative economic policies, said it was considering legal options, with president and CEO Alfredo Ortiz calling the forgiveness plan “fundamentally unfair” to those who did not take out loans for college.