President Joe Biden has fulfilled another one of his campaign pledges by ordering the U.S. Department of Education to cancel $10,000 of federal student loan debt for borrowers who make less than $125,000. Pell Grant recipients — who by definition come from poorer families — are eligible for an additional $10,000 in forgiveness.
While forgiving current debts has grabbed headlines, the Biden administration's changes to income-based repayment plans could do more to help resolve the student loan crisis going forward.
Currently, a new college graduate with a median $31,100 in student loan debt must pay back at least $297 per month, whether or not they have found gainful employment. While assistance programs allowing deferment, forbearance, or income-based repayment are available, these options not only delay paying off debts but cause interest to increase the overall balance as well.
