Here's How Joe Biden Plans to Address the Student Loan Debt Crisis

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President-elect Joe Biden has plans for the student loan crisis in the United States.

Student loan debt has skyrocketed in the past ten years, growing to $1.6 trillion with over 43 million borrowers, according to the US Department of Education. Young students have been burdened with massive amounts of debt that takes decades to pay off. This has led many lawmakers to run on an agenda of helping tackle this problem for so many Americans, one that Joe Biden was vocal about in his campaign.

However, many taxpayers who already paid their loans, never took any loans, or never went to college are concerned. According to the US Department of Education, around 30 percent of the $1.6 trillion in outstanding loan debt will not be paid back. This would leave that amount of defaulted debt to be paid for by taxpayers.

To tackle this issue Joe Biden has referenced a bill introduced by Congressional Democrats early in the pandemic that would forgive $10,000 worth of student loans for individuals in a certain income bracket. Biden has also proposed changes to the "repay as you earn" student loan plan introduced by the Clinton Administration. The Biden administration wishes to reduce the minimum payment from 10 percent of discretionary income to only 5 percent of discretionary income. Furthermore, the remaining balance on the loan that is forgiven would not be taxed as income.

So who would pay for the forgiven loans? Again, the answer is taxpayers. Biden plans to roll back some of the tax alleviations that were included in President Trump's Tax Cuts and Jobs Act Bill in 2017. This would raise taxes on high earners and corporations.

It's also important to address the types of individuals who have student loans. 60 percent of the outstanding $1.6 trillion in student loan debt is owed by individuals making $74,000 or more. However, the idea is that the remaining 40 percent would see a larger impact on their finances if some of their loans are forgiven.

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