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Cancellation of student debt -

On January 13, 2025, President Joe Biden announced one of the last measures of his presidency: The cancellation of student debt for 150,000 borrowers.

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Student loans -

This action, taken by the Education Department mere days before Biden leaves office, is a major move. The President claims US$183.6 billion has been waived in student loans throughout his time in office.

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Borrower defense -

The decision was based on a policy called ‘borrower defense,’ which allows students to have their loans annulled if they’re “cheated or misled by their colleges.”

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Public workers and those with disabilities -

It also includes public service workers who have paid student debt for a minimum of 10 years, as well as some borrowers with disabilities.

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December 2024 -

Politicians have been pressuring Biden to make the move throughout his presidency, especially in December 2024 when over 70 representatives issued a letter to the Education Secretary (pictured) to “discharge the student loans for the hundreds of thousands of students who the Department has already committed to providing borrower defense debt relief.”

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Defunct colleges -

The majority of the recent loan cancellations were granted to students who attended now-defunct colleges and who were promised clear job opportunities and other benefits that would never come to fruition.

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Pending applications -

An estimated 400,000 borrowers continue to have pending applications under the borrower defense scheme, although the specific numbers have not been released by the Education Department.

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New administration -

As Trump prepares to take office again, it’s unclear how many of these programs that could potentially relieve debt among struggling Americans will live on. For example, Trump promises to eliminate the program that Biden used to cancel debt during his next term.

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Reversal -

Republican lawmakers responded to Biden’s announcement by expressing that the reversal of this decision would be a priority once Trump’s administration takes office.

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Trump's first administration -

During Trump’s first administration, 130,000 applications under the borrowers defense program were outwardly denied. The Public Student Loan Forgiveness Program, another debt relief option that Trump also threatens to sack, had a 99% denial rate during his last presidency. Pictured is Betsy DeVos, Trump's former Education Secretary.

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Linda McMahon -

Trump's impending Education Secretary, Linda McMahon (pictured), echoes the position that Trump took during his last presidency and supports the policies he has expressed for his new term. While eliminating these programs would be difficult, they can be “restricted or deprioritized,” as they were under Trump’s last Education Secretary.

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Student debt -

The current student debt sits at around US$1.6 trillion in loans. This doesn’t even take into consideration different borrowing schemes that families and individuals use. The number is likely much higher.

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Student finance complex -

Professor Caitlin Zaloom of New York University calls the circus of financing higher education the “student finance complex,” in which families and individuals seeking higher education have to confront a confusing and complex series of policies and programs run by different entities to try to figure out how they will fund their education.

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Investments -

According to Zaloom, the first thing new, middle-class parents are encouraged to do by the government and financial firms is to start saving for their child’s future college by investing in what’s called 529 plans.

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Less than 5% can invest -

These plans are specific accounts that claim to grow mutual fund offerings. Less than 5% of American families actually invest in these plans, largely comprising those belonging to a higher economic class.

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Free Application for Federal Student Aid -

Then there’s filing for the Free Application for Federal Student Aid (FAFSA). This is the main vehicle to gain financial support from the various levels of government and institutions.

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FAFSA forms -

Filing for FAFSA support also provides an important piece of information. Through the filing process, the federal government provides an amount that families should expect to pay as part of the “expected family contribution.”

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Complexity -

There’s a huge complexity in this alone, as who is considered ‘family’ can be a complicated question. Outside the two-parent household, FAFSA may include the income of those who do not plan on contributing to college funds, such as stepparents or legal guardians in cases of estrangement.

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Direct Loan program -

Aid sources, like FAFSA, may still require students to take on loans from the Direct Loan program, the primary source of federal student loans. But even the federal programs can be crippling.

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Disadvantages -

A study conducted by the Federal Reserve notes that students who take out loans are significantly less likely to purchase homes and have less in savings for retirement, as well as hold less wealth in general and dislike their jobs more, in comparison to their peers who do not have loans.

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Rising cost of tuition -

The rising cost of education is a significant factor in the United States. The average tuition for a public, four-year college is US$11,610 for in-state residents. For those crossing state lines to attend a college of their choice, the average annual tuition reaches $30,780.

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Average salary -

According to the US Bureau of Labor Statistics, in 2024, the average salary in the United States sits at US$62,027. While the average is useful, income inequality is a notable issue in the US. If we look at the salaries of the middle class alone, the average salary for a single, middle-class individual is actually $33,350.

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Cost of college -

It is clear that one of the key issues of college accessibility is the cost of college. If the cost of attending higher education is reduced, it is very likely that student debt will be diminished.

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Educational policy -

Educational policy should reflect the aspirations of those who seek to attend higher education. Certainly, this requires college to, firstly, be an accessible resource.

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Student workers -

Secondly, students should be able to fully engage in their college experience by focusing on their studies, rather than working full-time jobs alongside their studies in an effort to pay for them.

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Student workers -

According to the Lumina Foundation, 40% of all undergraduate college students in the US work full-time jobs, while an additional 24% work part-time jobs. Nearly 50% of all undergraduate students are financially independent of their parents.

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Education as a commodity -

Engaging in studies full-time and working full-time to engage in studies turns education into a commodity that is to be consumed, rather than a process of learning that should be linked to participation in political and civic society.

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Stunting a participatory society -

The absurdity of the student debt crisis in the United States stunts the formation of a participatory society by creating deep economic challenges for students that overflow into their post-graduate lives, making their economic prosperity nearly impossible.

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Loan forgiveness -

It is clear that the US must invest more in higher education in efforts to lessen the burden on individuals and their families, and to diminish the debt crisis by forgiving loans for those who cannot make ends meet.

Sources: (Politico) (Arkansas Online) (Time) (New York Times) (Business Insider) (Knit People) (Investopedia) (Lumina Foundation)

See also: The best jobs that don’t require a college degree

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