Biden is now banking on his promise from when he was running for President, to relieve students of their debt. As inflation is getting worse this may not seem like the proper time to now add more taxes to the American population. Going through some key qualifiers to make sure you would even be able to receive loan forgiveness will be helpful, but also thinking about how this will affect you long term as even your taxes may go up. Let’s discuss how exactly loan forgiveness works.
Eligibility and Steps to Take to Receive Forgiveness
To qualify for the $10,000 if you are single your income is less than $125,000 and if you are married $250,000. If you received a Pell Grant and meet these qualifications then you could get up to $20,000. Private loans are not eligible. It is also key to check in with your loan server so they know how to find you. If you are part of an "income-driven repayment plan" and have turned in your taxes then you may not have to do anything else as the Education Department knows how much you make. Keep a close eye on your accounts and if something changes document it by screenshotting or printing it out. Also, check your credit report and balance to make sure there are no late balances popping up.
Now, Who Does this All Affect?
Andrew Lautz did some math and write an article on The National Taxpayers Union Fund site about who this will truly affect, and the answer is taxpayers. The estimated cost for taxpayers to pay is $2,000. The same article mentioned what The Penn Wharton Budget Model (PWBM) released an estimation on the total cost of $10,000 in debt cancellation for those making less than $125,000 per year would be 330 billion with a 10-year budget window.
NTUF posted a breakdown with a chart to show how much each household income will pay in taxes.
This one-time forgiveness will hurt many lower and middle-class Americans who are already being affected by inflation. It also does not address the biggest issue that college costs have skyrocketed over the years and society has pushed college on many people who were not ready to attend.
Opinion- How Should We Think About the Plan
Reminder, this has not fully been enforced yet. There is a chance this may not hold up in court. You should also think about how this will affect you as a taxpayer.
If you have debt and have been in need of assistance to pay off some of it then this may seem like a relief to you. However, if you are lower or middle class will you actually be benefitting by getting an increase in taxes because of the free money? Will you then be able to truly pay back the rest of your loan due to tax increases? It seems backward. Think back to the COVID relief checks and how we are paying for those now. Nothing is truly free. You will, all of us will, be paying back the loans either you or someone else took out regardless if it was on purpose or there was no way around going to school without one. Someone is paying for the taxes and will likely be you.