BY SAMANTHA MEDINA POW.
As the price for college has kept rising throughout the years, the percentage of students enrolling for the next school year has consistently dropped. In the midst of this, the only student population that has seen some growth in enrollment has been the Hispanic population.
Though the Hispanic student population has grown, they also represent those less likely to graduate with a completed Bachelor’s degree from a four-year university and Joe Biden’s Loan Forgiveness Plan could be a solution for that. As an expert in workforce development and a leading light for many years within the Texas Border Coalition, Mr. Blas Castañeda, my mentor, encouraged the writing of this piece as greater knowledge of this issue could have a great impact on the lives of many Hispanic students, parents, and future students in the United States.
President Biden first introduced his Loan Forgiveness Plan in August, 2022. It consists of three main components. The first part of the program states that students may apply to be provided with targeted debt relief to combat some of the harms caused by the COVID-19 pandemic. This was one of Biden’s campaign commitments. To qualify for this particular program, the borrower needs to earn below a total income of $125,000 if single and below $250,000 if married. The debt relief granted by the program can vary between $10,000 to $20,000 between non-Pell Grant recipients and Pell Grant recipients for loans held by the Department of Education. The second item in this plan would make the student loan system more manageable for current and future borrowers by cutting monthly payments in half for undergraduate students and fixing the broken public service loan forgiveness program. This would guarantee that students who have worked for a nonprofit, the military, the federal, state, local and tribal governments receive appropriate credit for loan relief. Finally, the third item addressed in this plan is designed to protect future students and taxpayers by reducing the cost of college and holding schools accountable when they hike up prices, as described by the White House Fact Sheet.
On the morning of November 14th, 2022, a Texas court struck down Biden’s Loan Forgiveness Program, arguing that it would be an infringement on the rights of citizens to have their voices heard by the federal government. Because of this, the program has been halted and will not be relieving people of loans until the verdicts are known in the next legal steps. As of now, the case has been elevated to the Supreme Court. The court will hear two cases related to Biden’s program by February.
Reaction to Bill
At the announcement of Biden’s Loan Forgiveness Plan, many borrowers gave a sigh of relief as this would rid many of their debt. For the Hispanic community, this could create an entire shift in the way many of these borrowers live their entire lives. Many of the students that make up the Hispanic community in college are first generation college goers. Of these, seven out of ten have student debt. This means that most of the Hispanic students in the nation cannot fully afford the price of college. However, they are also the only student population to have grown since 2016. As more and more Hispanic students join postsecondary establishments, the percentage that need loans grows, as well. Unfortunately, Hispanic students are also the ones most likely to drop out of college before their third semester of college due to the financial burden.
The terms detailed in Biden’s Loan Forgiveness Plan would not only change the way this community lives their life, but also impact a great deal of other minorities in the United States. In an interview with Leroy Cavazos, vice president of government and international affairs for the United States Hispanic Chamber of Commerce, he detailed the important distinction this bill could make in a college student’s life. Mr. Cavazos explained: “[Minorities] are usually left behind, so having policies that are equitable to everyone. . . will allow us to develop policies to help current and future generations.” He believes that our current generation is incredibly innovative and providing them this relief would free them to explore, to inspire them to look for new jobs and invest in new technologies.
Many concerns about the program stem from the belief that the money “lost” in the loan forgiveness would cause inflation throughout the nation. However, Biden’s Loan Forgiveness Program would be enacted alongside a lift on the current freeze of federal loan payments. This means that, on the one hand, some of the money owed to the government would be forgiven while payments to the government begin to be collected again. Because these two things happen at the same time, the impact on the overall economy of the United States is calculated to be fairly small. As chief economist Mark Zandi told CNN Business, “the combined impact will reduce real GDP in 2023 by 0.05 percentage points, drive down unemployment by 0.02 percentage points and cut inflation by 0.03 percentage points.” Not only would this program be beneficial to the students it directly impacts, but also to the businesses where these students spend their money.
Furthermore, Mr. Castañeda further expands upon this sentiment by stating that this program would be incredibly beneficial to the economy, as spending would be redirected back to businesses. A world of opportunities opens itself up when students do not have the burden of $1,000-$2,000 monthly loan payments. Millions of students would be able to direct their spending on their personal lives, on things like home ownership, health and wellness protection, starting families, investments, and so on. Not only does it give these students a better quality of life, but also relieves the stress of being tied to a never ending student loan. The economic impact on society is an incredibly crucial aspect that the justices of the Supreme Court need to consider in their upcoming case hearing.
Conclusion
As February approaches, the hope of millions of students hangs on a thread as they await the Supreme Court’s decision. The Loan Forgiveness Program is currently still halted as a second court case was picked up by the Supreme Court recently. The hearings are to take place in February with a verdict possibly coming in June. Depending on the verdict, the program could play an impactful role in the lives of college students across the nation.
Editor’s Note: The above guest column was penned by Samantha Denisse Medina Pow. Medina Pow is a student at Texas A&M University-San Antonio. The above column appears in The Rio Grande Guardian International News Service with the permission of the author. Medina Pow (pictured above) can be reached by email via: sammympow@gmail.com. (TOMADA DE THE RIO GRANDE GUARDIAN)