(President Joe Biden speaks about student loan debt forgiveness at the White House on Wednesday, with U.S. Education Secretary Miguel Cardona by his side. Source: Evan Vucci, NPR.org)
In August 2022, President Biden announced his plan for Student Loan Relief. It is a three-part compact that achieves Biden’s promise to cancel $10,000 of student debt for low- and middle-income borrowers.
During his campaign in his pre-President days, he claimed that he would provide any sort of aid in helping low- and middle-income families to tranquilize their struggles in pursuing education.
However, last month, six Republican-led states filed a lawsuit to a federal court in Missouri questioning this relief plan's legality and proposing the court allow a preliminary injunction, which delays the delivery of the student loan plan and puts it on hold until after the final judgment. The states claimed that the Biden Administration wasn't legally authorized to grant broad student loan forgiveness. In addition, this plan would also further cause detrimental effects on the state's financial situation based on their individual states’ policies, for example, it would lower the revenues of MOHELA, a student loan servicer based in Missouri. Because Biden’s student loan forgiveness program would drive more borrowers to shift their loaner from a state-owned program to a federally-funded project, the Missouri government, in this case, would lose a significant portion of its funding. And in return, attorneys for the Federal government argued that Congress permits the secretary of education to discharge debts as previously they did in the HEROES Act. Their statements also included that plaintiffs don’t hold the position to ask for an injunction.
Aside from the case in Missouri, Biden’s Administration is also facing a few other lawsuits over the same topic. The Missouri court’s verdict isn’t finalized; nonetheless, the plan’s specific details, such as its application process, have already been published this Tuesday, Oct 11th.
In the unit on learning the different powers the Federal and States government could hold, it didn’t explicitly mention what the circumstances would be when a certain Federal deal would affect the States’ operations’ well-being. Student Loan Forgiveness is indeed beneficial to the people, especially us, the students; it eliminates the possibility of families living in regions that don’t dispense as much financial assistance as this plan would. As a potential beneficiary, the program is only helping me and my family more, but the states may have much more negative views on this procedure.
Sources:
https://www.npr.org/2022/10/11/1128046324/biden-student-loans-debt-forgiveness-application
https://www.cnn.com/2022/10/12/politics/biden-student-loan-debt-forgiveness-ruling/index.html
4 comments:
I wonder what broader effects this plan will have on the economy, not just the state governments. I know that compared to 50 years ago, adults who graduated college are far less likely to own a house or have a family in the modern day, due to their financial situation. College tuition has skyrocketed, leaving them with intense student loans, and the average salary-to-housing price ratio has also changed drastically, not in homeowners' favor. So in general, young adults struggle financially compared to young adults in the past so this student loan forgiveness program could potentially have a significant effect on that and possibly change some statistics on homeownership and financial security for that population.
by Leia McAlister - Young
This plan will definitely benefit a lot of college students in debt. Obviously, some colleges' tuitions are higher than what the plans offer each student, but it will definitely provide some kind of benefit. However, this plan doesn't lessen inflation. Students eventually will get more money to spend, so I'm assuming that the prices of things will continue to rise. I don't have the economic knowledge to know whether that will happen for sure or how it's going to affect our economy in the future. I feel like why some states are against this plan possibly has to do with state debt and inflation.
Biden's plan is quite interesting. It brings up the ideas of federalism that we have been learning about in class. Biden is attempting to enact a federal policy, which has an effect on the individual states, in this case, Missouri is standing up. While the argument for Missouri does make sense, as they will inevitably lose funding as their loaners will shift organizations. At the same time, the argument can be made that the issue of Student loans affects Americans nationwide, and its urgency outweighs that of the individual states. As an inbound college student myself, the prospect of taking on huge student loans is quite frightening, so the efforts of the Biden campaign do make sense to me personally.
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