Students fear loss of ‘American dream’ after Biden administration debt forgiveness plan overruled by US Supreme Court
Around 43 million Americans had hoped that part of their student loan debts would be forgiven, as President Joe Biden sought to keep a pledge he made in his 2020 campaign for the White House.
WASHINGTON: There is a growing concern among millions in the United States over their student loan debts, as repayments restart this October after a three-year pause due to the COVID-19 pandemic.
Around 43 million Americans had hoped that part of their debts would be forgiven, as President Joe Biden sought to keep a pledge he made in his 2020 campaign for the White House.
US college tuition has more than tripled in the last six decades, with yearly costs – including fees and housing – now topping US$26,000, according to recent data.
A Supreme Court decision in June this year killed off President Biden’s US$400 billion plan to cancel or reduce federal student loan debts.
STUDENT DEBT HAMPERS AMERICAN DREAM
Among the affected students is Mr Asher Raza, who is majoring in national security and foreign affairs at Virginia Tech.
After three years of studying, he owes more than US$90,000. That figure is set to rise to US$140,000 by the time he graduates next summer.
“Those student loans are going to have a major outsized impact on my ability to achieve the American dream,” Mr Raza told CNA.
He added that he believes debt forgiveness would actually have a major impact on the economy in a positive way.
“A lot of people of my generation or older than me are drowning in student debt. If their debt was forgiven, they would be able to go on and get married (and) buy houses,” he said.
In the US, higher education is needed to get better-paying jobs.
For many, however, the only way to achieve that is by taking out enormous loans.
Ms Satra Taylor, director of higher education, workforce policy and advocacy at Young Invincibles, an organisation that advocates for debt cancellation, said: “Folks should be able to pursue whatever careers that they see fit without being shouldered with student loan debt.”
She returned to college recently in order to progress further in her field. In the process, she took on more debt.
“We made a decision out of the options that we had and that was in order to pursue the American dream, we had to acquire a college degree to do so,” Ms Taylor told CNA.
“That is the world that we are living in unfortunately. And so many young adults did what they were told and now they are being crushed by this student loan debt, and that is unjust.”
OVERRULED BY SUPREME COURT
After the Supreme Court ruled against President Biden’s plan, the administration is working on a new plan to address the mounting student debt, ahead of repayments restarting in October.
It is using existing regulations to cancel around US$39 billion in student debt for more than 800,000 people, and also hoping to limit monthly repayments, bringing them down from 10 per cent of a borrower’s income to 5 per cent.
Advocacy groups are worried that higher interest rates and increased costs of living will make the monthly repayments even harder.
Ms Michele Shepard, senior director of college affordability at The Institute for College Access and Success, told CNA: “The inflation continues rising and wages are stagnant, so every dollar that people have in their budgets is being earmarked for something other than student loans.
“But as soon as they have to make those payments, those dollars go back into making those payments, and they’re less available for other means.”
A quarter of borrowers – around 9 million people – were already defaulting on their loans, which risks damaging their credit rating and ability to borrow in the future.
That number is expected to rise, according to experts, endangering the financially stable future that students are trying to secure.
