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Financial Planning > College Planning > Student Loan Debt

Debate: Is Biden’s Student Loan Forgiveness Plan a Mistake?

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President Joe Biden has introduced a plan to forgive up to $10,000 in student loan debt for Americans who earn under $125,000 per year ($250,000 for married couples filing joint returns). The plan would also forgive up to $20,000 in student loan debt for Pell Grant recipients with loans held by the Department of Education (also subject to the $125,000 per year earnings cap).

Biden’s plan would continue the pause in student loan repayment obligations until January. The plan also includes new income-based repayment rules, so that payments would be capped at 5% of the borrower’s discretionary income. Debt relief will not be treated as taxable income for recipients.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about President Biden’s plan to forgive up to $10,000 in student loan debt for certain taxpayers.

Below is a summary of the debate that ensued between the two professors.

Their Votes:



Their Reasons:

Bloink: Millions of Americans struggle under the weight of crushing student loan debt. Many student borrowers took out their loans without a full understanding of the terms or consequences. Now, they’re struggling with sky-high payments and interest that’s accruing rapidly, making it impossible for many of these borrowers to ever hope to repay their loans entirely. This plan would benefit millions of Americans who need help the most right now.

Byrnes: We’re facing the highest inflation levels that we’ve seen in decades — both Republicans and Democrats should be acutely aware of that fact. American business owners are also struggling with an unprecedented labor shortage — and millions of Americans have simply left their jobs without worrying about paying back the student loans that they chose to take. Forgiving student debt outright isn’t going to help with either of those issues. In fact, it will exacerbate both of them, making matters worse for our economy. 


Bloink: This provision provides assistance only to borrowers who don’t have income levels that are high enough to realistically repay their debt, so it’s narrowly tailored to help those who are struggling the most. We have to face the reality that the student lending system is broken — and this is a step in the right direction toward giving something resembling a fresh start to those who are in debt because of that broken system.

Byrnes: This provision also unfairly benefits the highest earners in the U.S., so I’m shocked that Democrats would support it. Further, it provides an unfair benefit to those student borrowers who have focused their earnings on other things, penalizing those Americans who have focused on repaying their debt responsibly over the years.


Bloink: About one-third of all borrowers have student loan debt, but were never able to finish their degrees — making it nearly impossible for them to repay their loans. Many of those people couldn’t finish their degrees because the cost of finishing college was just too high. The system is broken, and this provision is a step in the right direction toward fixing it.

Byrnes: In the end, we aren’t even sure whether Biden has legal authority to implement this new loan forgiveness program. This seems like outright campaigning ahead of the midterm elections, and everyone should realize that the likelihood that this proposal will actually become reality is very low — even if Democrats do manage to retain their control of Congress after the next elections.


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