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College is expensive. To make matters worse, the cost of higher education is not trending in the right direction. According to the White House, the price of a college education has tripled in the last 40 years.
On Aug. 24, President Joe Biden announced that a three-part plan is being launched to help. Here’s a quick breakdown of how it works.
PART 1: STUDENT LOAN FORGIVENESS For students who received the Federal Pell Grant, up to $20,000 in debt will be cancelled. For those not receiving the grant, up to $10,000 will be forgiven. Each person applying for forgiveness must earn less than $125,000 annually.
Student loan forgiveness is capped at a person’s remaining loan balance. So, someone who only owes $5,000 will only receive $5,000 in relief.
PART 2: MAKING STUDENT DEBT MORE REASONABLE Current monthly student loan payments for undergraduate degrees will be cut in half. Also, the Public Service Loan Forgiveness (PSLF) program, which serves nonprofit workers, military members, and government officials, will be improved.
PART 3: CHEAPER COLLEGE Biden is hoping to give out more Pell Grant funds. He also aims to make community college free.
Another aspect of the plan is that the current payment pause for federal student loans will be extended to Dec. 31. Borrowers will not need to begin making payments again until after the pause ends.
Director of Student Services Libby Jean oversees financial aid for the college. She said that the loan forgiveness plan will affect a large portion of Olivet College students. “Currently, 82% of our students are borrowing federal loans. Our students graduate, on average, with $29,500 federal student loan debt. So, we expect that this one-time loan forgiveness will have a very positive impact on the lives of our students and their families.”
Jean noted that the college is planning to take several steps to assist students in applying for relief. “We intend to keep our students and their families informed on the application process. We will email students and send letters to home addresses with information and instructions. As always, students can meet individually with our financial aid staff to discuss their federal loans and receive assistance in applying,” Jean said.
Kayden Shrock, sophomore, said that although the new plan could be useful for him currently, he is apprehensive about the long-term effects.
“I feel like the new student loan forgiveness will help me out at this exact moment but looking farther in life it will not because taxes will be even higher, and my kids and I will pay for it.” Shrock said that he might not even apply for the relief due to those concerns. “I already have a student loan so I feel like I would like to just not get the forgiveness because I knew how much student debt I would be in.”
For information, including how to apply and which types of loans are eligible for relief, students can reach out to Jean at ljean@olivetcollege.edu. Students can also check out the White House’s fact sheet by clicking this link https://bit.ly/3RLf6rZ or scanning the QR code below.
Photos courtesy of Abbey Peters.