During Joe Biden's presidential campaign, he pledged the cancellation of at least $10,000 of student debt per person. Last August, President Biden announced a plan to cancel up to $10,000 in student loans for Americans earning less than $125,000 annually. Applications were halted in November following a legal challenge, leaving over the 25 million applicants left in suspense over the fate of their student loans.
Will we see student loan forgiveness on this side of the pond in the next few years?
The Supreme Court faces two legal challenges: Department of Education v Brown and Biden v Nebraska. The former case is brought forward by two individuals who did not qualify for the full forgiveness of student loans proposed by the program. The latter is a case brought forward by a group of Republican-led states who argue that the Biden administration does not have the authority to cancel student debt.
Looking at the issues that have emerged in response to America's student forgiveness plan can aid any future forgiveness plan in the UK. Fortunately, the later Supreme Court case does not apply here. The former however poses the question of the extent of student loan forgiveness. Would a certain amount be written off or would it entirely be written off? Are there limits on who qualifies for student loan forgiveness or is everyone entitled?
In response to the debate over student loan forgiveness, the BBC published a video as part of their election series The Other Side. The video features two voters, one is for student loan relief and the other sees it as an insult. Both arguments are compelling. The former highlights that she, like many, have paid off their student loan (twice in her case) but mounting interest has prolonged this process. Interest is perhaps the largest issue surrounding student debt. Current interest levels in the UK are 6.9%. I am currently in Stage 2 and have accumulated £799 in interest. Mad as I still have just under a year and a half left of university.
Would a certain amount be written off or would it entirely be written off? Are there limits on who qualifies for student loan forgiveness or is everyone entitled?
The latter voter makes an interesting argument, claiming it is an insult to forgive student loan debt for those who "sacrificed a lot to pay out of pocket". There is a common complaint that comes up when debating student loans: how is it fair for those who have already paid it off or paid most of it off? This argument is an interesting one for me as it follows the same strain of 'I suffered so you should suffer too". This mindset is anti-progress. Why would you not want the next generation to be better? Not to mention how the amount of student loan is differing between generations because of changes to tuition fees and student finance.
In 2017, the Sutton Trust estimated that 81% of students would not pay their loans off in full. Last year changes were brought in with the aim of having more graduates pay their loans off in full, lowering the pay back threshold to £25,000 and extending payments for another 10 years. This means students starting September 2023 may be paying off their student loans into their 60s. In light of the havoc wreaked on university education in the past few years from COVID-19 to strikes, students have not been getting their money's worth. Not to mention how arguably the maintenance loans are not entirely fit for purpose.
Will we see student loan forgiveness on this side of the pond in the next few years? Perhaps, but it certainly will not happen with the Conservative Party in power.
