How Biden's student loan cancellation plan could affect college plans in the future

Student loans are a huge source of frustration, but soon many Americans may see some relief.

In August, the Biden Administration announced a plan to cancel up to $10,000 of student debt for any borrower with an income below of $125,000 a year.

President Joe Biden also plans to cancel an additional $10,000 in loan debt for any student who received a Pell Grant, which helps lower-income students pay for college.

The White House estimates that 3.5 million Californians will qualify for at least $10,000 in student debt relief.

“This is progress towards putting more people, particularly students, on solid financial ground after college,” said Emmanuel Rodriguez, California policy director for The Institute for College Access and Success (TICAS). “ It is clear our higher education system is overly reliant on debt finance education, but it is progress across the nation and for millions of borrowers.”

Isaiah Jones, a freshman at California State University Northridge (CSUN), says the debt relief plan will help students accumulate wealth and relieve their financial burdens.

“This will be a stepping stone to the right direction to accumulate wealth,” said Jones, “I feel even for students who have more than me in debt, it will be somewhat of a relief off their shoulders which they can focus on school than the cost of the school.”

So how will canceling some student loan debt change the choices students make before or after college?

“After college, this will make sure students do not have to worry about high monthly payments, ballooning balances, and make it harder for them not to build wealth after graduation,” Rodriguez said.

“Before college,” Rodriguez added, “make sure you maximize all your need base aid through FAFSA,the Dream Act, the Merit based aid, and with scholarships…if you do have to borrow make sure you borrow through the school system and not private loans since you do have more protection.”

According to Forbes, borrowers owe more than $1 trillion in student loan debt. As tuition costs have risen, so has the need for student loans. Other expenses also drive students’ need to borrow, like the costs of books, laptops, school supplies, transportation, and meals — all of which can add up quickly. In a survey released by the California Student Aid Commission, students in the CSU system spent about $18,000 per year on non-tuition expenses, including rent and food.

“I think the biggest driver of cost right now for post secondary education is non-tuition cost: cost of housing, food, transportation, books, school materials,” said Rodriguez. “All these non-tuition factors are truly the ones that drive up the majority of cost of college… I think in the long-term when we are talking about making college affordable, tuition is a factor, yes, but I think the biggest driver is going to be those non-tuition costs.”

CSUN sophomore Jasmine Hallett finds it difficult to balance going to school full-time and having a full-time job while paying for tuition and campus housing.

“I lived on CSUN housing and pay out-of-state tuition…paying for campus housing made it even worse, adding another $10,000,” Hallett said. “I moved off campus; luckily, it’s a little cheaper. But it’s still a struggle to go to school full time and also have a full time job.”

“In my situation it was more of the non-tuition cost,” said Jones. “It made it hard, because not only did I have to move, but I had to live off-campus, too, because of how housing filled up so quickly…I believe we have to focus on the non-tuition cost because it is rising and do know if it’s going to get better or worse.”

The student loan relief plan has caused disruption between political parties. Six Republican-controlled states have filed a lawsuit challenging Biden’s loan cancellation plan. They argue the program goes too far, violating the separation of powers.

But some argue Biden’s does not go far enough to address the root of America’s student debt problem. The Brookings Institution predicts colleges and universities will likely continue to take advantage of society’s need for college graduates by relying on student loans. Those loans allow colleges to keep increasing what they charge in tuition.

“Our education system particularly our higher education system needs to move away from this debt finance model,” said Rodriguez, “moving forward we need more systematic reforms to make college not only accessible but affordable for all students especially students who are most in need of support to successfully complete a degree and climb up that economic ladder.”

Approximately 20 million borrowers could get their remaining federal student loan balances wiped out, according to the U.S. Department of Education.

As a result of the high-interest rates, Hallett says she hopes to get approved as the debt relief plan will help her reduce her payments.

“I am still a sophomore so I still have a few more years to go but who knows how long it will take me to pay off my debt,” said Hallett. “I am concerned about the interest rates that will just keep adding on so I hope I get approved if I apply [for forgiveness]. That will definitely help in reducing … my payments.”

In early October, the U.S. Department of Education will release an application for student loan forgiveness.

The Department of Education is also warning borrowers of scams relating to the student loan forgiveness program that ask for payment.

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This story was produced by Reyna Torres, Giovani Reyes & Jennifer Valdez