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JOLIE: Loan forgiveness programs are not reliable forms of financial relief for students

Column: C'est Tout

As students make financial decisions about their higher education, it is essential to keep in mind that government debt relief programs may be subject to legal complications.  – Photo by null

Since President Joseph R. Biden first declared the possibility of student debt relief, the idea has gripped the American consciousness like an earworm. No matter how politically elusive the earworm becomes, students across the country struggle to suppress its tune.

Each semester, students are required to pay term bills consisting of tuition and fees. Regardless of financial aid packages, the fact remains that it is incredibly costly to attend a university. Some students who cannot fully cover tuition costs default to securing student loans. 

A student loan is an amount of money that one borrows from the federal government or a private institution for post-secondary education with the expectation that one will repay it later with interest. Student loans are useful for people who want to continue their education in spite of financial barriers. 

The cost of this temporary convenience rears its ugly head after graduation. The federal student loan debt is currently $1.7 trillion and rising with more than 42 million borrowers.

Being told that higher education is a worthwhile investment all of their lives, students latch onto student loan services in hopes that they will help facilitate their career aspirations. 

Many Americans, though, have experienced student loans as unforgiving burdens that restrict their ability to enjoy the benefits of their education after graduation. Furthermore, the downward spiral of the economy during recessions makes it all the more difficult to live comfortably and reserve funds for monthly loan payments. 

Introduced in the second and third fiscal quarters of 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act offered student loan debt relief which affected millions of loan borrowers. 

This legislation intended to implement a variety of programs to address issues related to the onset of the coronavirus disease (COVID-19) pandemic, according to the U.S. Department of the Treasury. During this time, loan repayments were stymied to relieve Americans from economic hardship. 

The one-time loan forgiveness plan proposed by the Biden-Harris Administration in August 2022, an executive order which allowed federal student loan borrowers who meet income requirements to have up to $10,000 in debt canceled. If the borrower received a Pell Grant, the forgiven amount increased to $20,000.

With the pandemic on a seemingly declining slope and the economy in its rebuilding stage, the continued suspension of student loan repayments has faced many roadblocks. The U.S. Court of Appeals for the Eighth Circuit paused the debt relief plan after an appeal filed by six Republican-led states.

The Biden-Harris Administration has launched a number of temporary loan forgiveness initiatives designed to provide billions of dollars in debt relief. For example, the new Income-Driven Repayment (IDR) plan intends for many borrowers to see lower monthly payments and faster student loan forgiveness.

In spite of these actions, it is becoming more clear that effectuating loan forgiveness will not come easy. With states worried for their economies and an overall political panic, loan forgiveness will face legal opposition at every turn. 

These legal blockades have left post-graduates and current students confused about how to financially conduct themselves. Borrowers must continue to wait through appeals and hope that the entire plan is not discarded. 

It proves even less useful that determining agencies like the Education Department have provided no concrete timeline on forgiveness initiatives like the new IDR Plan. 

The fluctuating status of debt relief hints that it is necessary for students to prepare for the worst scenario: the full-fledged rejection of the debt relief plan. Students should evaluate their current lifestyles and devise a budget whereby they can comfortably live within their means while paying what they owe. 

The ongoing legal battle will be a determining factor in the kind of salary students aim for after graduating. It will also influence whether graduate school is a wise decision, considering the probability of no debt relief.

Weighing the balance of investing in higher education as opposed to the aftermath of accumulating student debt is crucial to achieving the lifestyle one longs for.

Even with the promise of debt relief, student debt is almost an unavoidable aspect of American education. The best decision one can make is to adequately prepare to weather the loan repayment storm. Surfing the internet for budget templates is a good starting point. 

Determining eligibility for loan relief programs can also be useful for structuring personal financial budgets as well as refining post-undergraduate goals. In the meantime, take time to consider the consequences of student loan repayment and how it may uniquely affect you and your family in the years to come.

Faith Jolie is a junior in the School of Arts and Sciences majoring in journalism and media studies and women's and gender studies. Her column, "C'est Tout," runs on alternate Mondays.

*Columns, cartoons and letters do not necessarily reflect the views of the Targum Publishing Company or its staff.

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