New Biden Student Loan Plan

Ashley Park

The start of this new calendar year brings updates to President Biden’s Student Loan Plan that could potentially affect countless qualifying students. First introduced in August 2022, President Biden made an announcement to forgive federal student loan debt. He shared on Twitter that his administration sought to “give working and middle-class families breathing room as they prepare to resume federal student loan payments in January 2023.”

In order to meet the qualifications for the forgiveness, which could amount to $10k, individuals must make less than $125k a year. Therefore, the total of those who will benefit amounts to around 43 million borrowers, with the debt of nearly half of them being completely scrapped. This sparked a variety of responses from differing political parties, racial groups, and borrowers with higher debt. Some expected more coverage, while others thought the plan was unjust to those who kept up with their tax and loan payments.

More recently, in January, the Biden administration released an update, stating that a more flexible plan is in the works; however, the matter of how and when it will be carried out is still up for discussion. NPR sources shared that bigger complications were met as the currently weakened financial ability of the Office of Federal Student Aid (FSA) was taken into consideration. Despite government funding bills that were established, the FSA is still underfunded for the big plans in store for the upcoming year.

While Biden extended the payment pause implemented by both the Trump and Biden administrations since the outbreak’s inception, federal courts have temporarily halted Biden’s student loan forgiveness plan. The outcome of this litigation will determine the status of the pause’s continuation.

The plan itself has been a topic of uncertainty for the past several months, as the debate over its legality has caused confusion amongst borrowers. However, with the changes FSA is being issued to carry out, there is a high level of confidence that permanent actions for student borrowers will be made in 2023.