President Biden Announces Student Debt Forgiveness in 2022
While campaigning for the presidency in 2020, Biden promised America that, if elected, he would forgive millions or even billions of dollars in student debt.
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By 2022, President Biden made good on his word and initiated a debt forgiveness program for millions of Americans with outstanding student loans. For those eligible, $10,000 was canceled from their debt forever.
Why Did Biden Cancel Student Debt?
Biden promised and delivered student debt forgiveness because he, like millions of other Americans, was frustrated by the excessive cost of higher education throughout the country.
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The student loan system is riddled with issues. Young Americans know they need to go to college or university to apply for competitive positions, but almost none of them have tens of thousands of dollars to do so. Therefore, they apply for loans that they are paying off (thanks to high interest rates) for the rest of their lives.
Biden Argues Some Establishments Mislead Prospective Students
While the general consensus within the Biden Administration and the country is that student loans are a real problem for the economy, the president has also argued that several institutions purposefully mislead prospective students in order to get their money.
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Just last week, Biden called out The Art Institutes, a private for-profit organization which provides associate, bachelor, and master degrees in dozens of schools around the country.
President Biden Calls The Art Institutes "Cheaters"
In a recent statement, the president explained, “[The Art Institutes] falsified data, knowingly misled students, and cheated borrowers into taking on mountains of debt without leading to promising career prospects at the end of their studies.”
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He, as well as the Department of Education, agree that because of The Art Institutes malicious promotion and inaccurate representations of its programs to students, those students who took out loans to attend one of their schools deserves their money back.
This Accusation Comes From a Detailed Investigation
President Biden’s frustration and harsh words for The Arts Institute didn’t come out of nowhere. The Department of Education conducted an extensive investigation into the organization and then released that information to the president and the public.
Source: Freepik
The DOE said plainly, “[The Art Institutes made] pervasive and substantial misrepresentations to prospective students about post graduation employment rates, salaries, and career services.”
How Much Will Art Institutes' Students Get Back?
The DOE found that the mistakes made by The Art Institutes occurred between January 1, 2004 and October 16, 2017. Therefore, any student enrolled at one of their schools during this time is eligible for debt forgiveness.
Source: Freepik
The DOE plans to begin informing eligible borrowers as soon as possible. They assume that each student will receive an average of $19,000. This plan doesn’t just apply to outstanding balances; even those who have already paid off their student loans can receive partial refunds.
Opposition to Biden’s Student Loan Forgiveness Plan
Although millions of Americans are thrilled with Biden’s decision to forgive billions of dollars of student debt, there are even more who are opposed to the plan.
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According to the Cato 2022 Student Debt Cancellation National Survey, 64% of American adults would only approve of the cancellation of debt if the money doesn’t come from the taxpayers.
Someone Is Paying to “Forgive” These Loans
The argument against Biden’s student loan forgiveness is that the billions of dollars he needs to do so have to come from somewhere. Americans have no problem with the federal government giving a break to students who need it, but they don’t want that money to come out of their own taxes.
Source: Freepik
Biden originally claimed that there was “plenty of deficit reduction to pay for the programs,” though adding the nation’s deficit is only prolonging the inevitable. As almost every financial expert would agree, eventually, the American taxpayer will be footing that bill.
How Will Debt Forgiveness Fix the Student Loan System?
The next complaint of Biden’s debt forgiveness program is that it doesn’t provide any kind of tactical solution to fix the broken student loan system for future generations. It’s really just putting a bandaid on a bullet wound.
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Just one year at a four year university in the USA currently costs an average of $36,436, which is around $146,000 over four years. Not to mention the fact that college curriculums are so grueling that most students don’t have time to work while they study.
Art School Was Always a Riskier Choice
Of course, there are many students who leave their four-year universities with a job offer that enables them to quickly and efficiently pay back their student loans and move forward with their lives. However, that reality is becoming far more infrequent.
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In regard to Biden’s most recent announcement regarding forgiveness for students of The Art Institutes who were misled by the organization, many people argue that art school has always been a risky career path. Though, others say that their deception encouraged students who may have chosen another path if they knew the truth.
43 Million Americans Have Outstanding Student Debt
As of February 2024, about 43 million Americans are currently living with outstanding student debt. And that’s in addition to credit card debt, mortgages, car payments, and the various other bills that are slowly climbing every month.
Source: Freepik
Every political decision, including Biden’s decision to forgive billions in student debt, becomes controversial. However, there is no doubt this decision is helping millions of Americans pay their bills on time and sleep a little easier right now. And soon, those who attended The Arts Institutes will feel the same.