When Diana Lindloff graduated from the University of Nebraska at Omaha in 2009, she began the long journey of paying off her student loans.
Lindloff estimated his debt was around $20,000 at the time. Despite working several jobs, sometimes as many as three at the same time, Lindloff said she only managed to pay off 25% of the debt in 10 years.
“Certainly, I pay the minimum. But that’s all I can ditch,” she said.
When President Joe Biden announced plans Wednesday to forgive up to $10,000 in individual student loan debt, Lindloff expressed excitement.
“Just lowering it a bit gives me some hope that I’m going to pay for it before I retire,” she said.
Biden’s plan, which has been criticized by Republican officials in Nebraska and beyond, is almost certain to face legal challenges. But if his plan survives, he could deliver a boon to part of the nation ahead of the midterm elections this fall.
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More than 43 million people have federal student debt, with an average balance of $37,667, according to federal data. Almost a third of borrowers owe less than $10,000 and about half owe less than $20,000. The White House estimates Biden’s announcement would wipe out federal student debt for about 20 million people.
Under Biden’s plan, borrowers who earn less than $125,000 a year, or families earning less than $250,000, would be eligible for the $10,000 loan forgiveness. Pell Grant recipients would be eligible for loan forgiveness amounts of up to $20,000.
Current students would only be eligible for relief if their loans were taken out before July 1, 2022. Biden is also proposing to cap the amount borrowers must pay monthly on undergraduate loans at 5% of their income, up from 10 % previously.
The president is also extending a pause on federal student loan payments for what he called the “last time” through the end of 2022.
Alexandra Espinoza, a UN official, asked how the plan would be funded.
“While the idea of repayable student loans sounds good in a perfect world, who’s going to pay for it? Will this lead to higher taxes? What will this come out of? she says.
She added that there are many alternative avenues for students to avoid being burdened with student debt, including seeking scholarships and attending community college for their first two years.
“If everything in life is free, what will it do to the concept of hard work?” she says.
Susan Reay, an assistant professor at the UN’s Grace Abbott School of Social Work, welcomed the announcement. Noting that she has taught students who have worked multiple jobs to make ends meet, she said Biden’s plan will help make life easier for her students.
She also said the prospect of student debt relief is critical to workforce development, especially in careers such as social work and teaching.
Jake Drake, a student regent representing the University of Nebraska-Lincoln and student body president of the University of Nebraska Student Association, called Biden’s plan “an important and impactful first step for borrowers to across the country”.
“Students on our campus will already feel the impact of increased financial freedom knowing that payments are on hold and a significant portion of debt will not hinder their future,” Drake said in a statement. “Certainly there is still work to be done to make higher education more accessible and affordable, but I am delighted to see this issue being addressed at all levels of government.
Nebraska’s congressional delegation, made up of all Republicans, has denounced Biden’s debt cancellation plan, saying in statements, among other things, that it would worsen inflation and shift the burden onto taxpayers. Rep. Don Bacon called the plan “reverse robin-hood” while Sen. Deb Fischer called the policy “economically backward.”
“The president can turn it around any way he wants with Pell’s facade, but ultimately his debt cancellation program forces blue-collar workers to subsidize white-collar graduate students,” Senator Ben Sasse said. . “Instead of holding to account an underperforming higher education sector that is pushing so many young Americans into massive debt, the administration’s unilateral plan is baptizing a broken system.”
Jim Pillen, a regent at the University of Nebraska and the GOP nominee for governor, called Biden’s plan “Big Government Socialism.”
“This decision will hurt the people of Nebraska every day by increasing our debt, increasing inflation and causing colleges and universities to raise tuition fees,” he said.
This report contains material from The Associated Press.
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