Fil-Ams react to the landmark effort that will affect 43 million borrowers
IN 2015, when she graduated from USC with a degree in criminology, Filipina American Stephanie Rivera was tasked with her first mystery to solve: how she was going to pay off her student loans.
Rivera, who now works as a forensic psychologist in San Diego, recalled that getting accepted to USC as the first person in her immediate family to attend college was a huge triumph.
But the celebration over her acceptance at USC was short-lived when her family had to figure out how to fund her education as they, like so many other families who aren’t quite poor but aren’t quite rich, turned to alternative ways to pay, such as taking out numerous loans.
“We weren’t rich enough to easily foot my tuition, but we weren’t considered low-income enough to qualify for any financial aid, so I ended up having to apply for scholarships and take out several loans,” Rivera told the Asian Journal in a phone interview.
Fast-forward to now, Rivera is living a more comfortable life but is still racked with tens of thousands of dollars in student loan debt.
“I don’t think I can feel truly relaxed until my debt is entirely done, whether I pay it off in a million years or it’s forgiven,” Rivera shared.
When President Joe Biden announced his administration’s effort to forgive up to $20,000 in federal student loans for Pell Grant recipients and up to $10,000, Rivera saw it as good news.
Biden’s announcement, which was made on Wednesday, Aug. 24, revealed that individuals who make under $125,000 a year or couples earning less than a combined $250,000 are eligible for up to $10,000 in loan forgiveness.
Currently, Americans — current and former recipients — owe nearly $1.6 trillion in federal student loans. Nearly 43 million loan borrowers are expected to receive some relief, totalling a collective $20 million debt that will be erased.
Biden’s plan would also include current students, and student loan borrowers who are still dependents will be included depending on their guardians’ income. The plan also covers graduate degrees, and beneficiaries of loan forgiveness will not have to pay taxes on the amount forgiven.
According to the White House, most borrowers will need to provide proof of income in order to qualify, but nearly 8 million borrowers whose information is already on file with the Department of Education should have their debt cancelled automatically.
Biden’s relief plan also extends the student loan payment freeze to Dec. 31, 2022. It was set to expire at the end of August 2022.
Biden’s student loan forgiveness efforts follows the signing of the Inflation Reduction Act, another landmark win for the Biden administration and key Democrats who are looking to maintain the majority in Congress ahead of the midterm election.
However, the Biden administration’s attempt to make good on a key campaign promise will likely face legal challenges. According to the United States Department of Justice, the administration is harnessing a 2003 law called the HEROES Act that allows it reduce or eliminate student debt in certain situations.
The law was adopted in the middle of the wars in Afghanistan and Iraq, and it gives the Department of Education power to bypass rules concerning financial aid and student loans during national emergencies. (Former President Donald Trump’s national emergency declaration made in 2020 due to the coronavirus pandemic is still in effect.)
Education Secretary Miguel Cardona said in a statement, “Today, we’re delivering targeted relief that will help ensure borrowers are not placed in a worse position financially because of the pandemic, and restore trust in a system that should be creating opportunity, not a debt trap.”
For years, student loan forgiveness has been a keystone issue among Democratic voters who have been calling out Biden and other moderate Democrats for delaying the issue. In fact, activists say that the effort doesn’t go far enough and have called for $50,000 in debt relief to address systemic inequalities in the student loan and financial aid industry.
“I think it’s what separates a lot of liberal, middle-of-the-road Democrats from more progressive blue voters, this issue of student loan forgiveness,” Joseph Castillo, a Los Angeles-based marketing consultant, told the Asian Journal over the phone.
Castillo shared that despite graduating from San Diego State University in 2012, he’s still grappling with student loan payments. He said he’s on the tailend of his payments (less than $3,000 left to go), but he thinks that Biden’s plan could usher in more “necessary loan forgiveness.”
“Just because I’ve paid off most of my student loans doesn’t necessarily mean I’m entitled to say that current and future loan borrowers don’t deserve to get their loans forgiven,” Castillo declared, referencing the hordes of individuals on social media who say because they’ve had to pay off their loans, current and future students should, too.
And, aside from the legality of erasing student debt, many believe that student loans shouldn’t be forgiven on such a wide scale. But Castillo argues that the rising cost of education has become out of control and it’s putting many students in “nightmarish situations.”
He added, “Even stepping back from just student loans: most white-collar professions require a bachelor’s degree at minimum. Most people now need not just that but a graduate degree to move up in their industry. Going to and graduating from college — which is now a requirement for most decent-paying professions — is so much more expensive now than it was for Gen X-ers and older.”
According to a Forbes article, the average cost to attend a four-year college as a full-time student in 1980 was $10,231 annually, accounting for inflation adjustment; and this covered all tuition fees and room and board.
By 2019, that cost skyrocketed $180% to an average of $28,775. The 2020-2021 and 2021-2022 academic years saw a 1.7% drop in public institutions, which is likely due to pandemic-related relief programs.
“You’ll hear tons of older people, even Filipinos, who might complain about how ‘unfair’ this is, but when you look at the landscape from when they were college students to now, and just the overall increase of the cost of living, I think most would see that as unmanageable,” Castillo said.
According to the Biden administration, borrowers should visit https://studentaid.gov/debt-relief-announcement/ for more information and to sign up for updates to the relief plan. n