One of president Joe Biden’s initial campaign promises was wiping $10,000 per student borrower currently in debt. The president has been more than occupied with dealing with the fallout of the COVID-19 Pandemic and geopolitical tensions, but now it seems he is able to add some resolution to this current predicament. On April 18th, Biden announced that 3.6 million borrowers indebted will receive some form of aid as they look to repay outstanding debt. He also promised complete forgiveness through the IDR (income-driven repayment program) after 20-25 years of interest paid. This move was necessary as student debt has reached unprecedented levels extending to $1.75 trillion at the end of 2021. The question becomes, are the president’s efforts enough to tackle this problem head-on? What does the future of student debt forgiveness look like once this precedent is set?

The recent action was taken by the administration only canceled a fraction of student debt outstanding specifically a little over 1% of the $1.75 trillion. According to press secretary Jen Psaki, cancellation of student debt could still be “on the table” as the administration looks to further provide relief for millions of more Americans. As discussed in the last post, canceling student debt entirely is dangerous as it sets a precedent for future delegation of debt problems when borrowers begin to tread water. The future of debt forgiveness is an important topic to discuss as it affects millions of Americans explicitly and tens of millions more implicitly.

The escalation of student loans 2008-2021 (cnbc.com).

Another truth is that the United States is currently in about $30 trillion worth of debt itself, a figure that has risen ever since 2001. The U.S. government must be vigilant about excessive spending, especially in such a precedent-setting event that total debt forgiveness would create. Honestly, I believe president Biden is currently pursuing the best course of action by providing nominal amounts of support based on scheduled payment plans. The IBR (income-based repayment) was created in 2009 and has served useful by allowing students to plan for payments and receive forgiveness based on their responsible decisions. President Biden plans to revamp this program and look to make it more effective in use for all Americans.

In 1999, then-president Bill Clinton started an initiative to make America debt-free by 2013, an initiative that clearly reversed (rollcall.com).

The future of debt repayment relies on correcting the mistakes of the past. For too many years, borrowers were steered in the wrong directions which caused the ultimate fallout that currently exists today. President Biden has a challenging task of reforming programs such as IBR to make them more centric around the borrow rather than collection agencies looking to make a profit off of extended interest time frames. The government does not exist to bail individuals out and cancel debt entirely, but instead as an organization that creates a solid foundation for its constituents and offers advisory and assistance along the way. We are currently at a crossroads where the outcome of this adversity is solely in the hands of the president and congress. Time will tell if payment plans are reformed and if millions of Americans can find their way back to being debt-free.