The Biden administration is forgiving over $6 billion in student debt for former students of The Art Institutes. The schools misled students about job prospects and salaries. This automatic relief affects 317,000 borrowers who enrolled between 2004 and 2017. The schools falsified data, including using Serena Williams' income to inflate salary expectations.
After the Supreme Court blocked President Biden's initial student loan forgiveness plan, his administration has revised it to avoid legal challenges. The new plan focuses on specific groups of borrowers, such as those who have made payments for many years or attended low-quality schools. The government is also using a different law, the Higher Education Act, which gives the Education Secretary authority to forgive certain student loans. By targeting specific borrowers and using a different legal basis, the administration hopes this plan will withstand court scrutiny.
The Biden administration has forgiven $7.4 billion in student debt for 277,000 borrowers. This is possible through improved oversight of income-driven repayment plans and the Public Service Loan Forgiveness program. Over 4.3 million people have had their federal education loans cleared, totaling $153 billion in aid, since Biden took office.
President Biden's plan proposes up to $20,000 in student loan forgiveness for certain groups. Loan forgiveness granted before 2026 will not result in federal tax liability. However, future forgiveness may be subject to federal taxes and potentially state taxes. Borrowers who receive forgiveness under income-driven repayment plans after 2025 may face tax consequences. It's important for borrowers to consider how tax implications could impact them.
More students are dropping out of college, with 40 million currently unenrolled. Financial concerns are a major factor, especially for first-generation, minority, and low-income students. Over 26% of current undergrads consider leaving or face dismissal. Experts highlight the importance of financial planning and support for these vulnerable students.
Women carry the majority of the country's student debt, with factors such as caretaking responsibilities and gender pay gaps contributing to the burden. Experts recommend exploring options like income-driven repayment plans, loan deferments, and hybrid financial planning to manage debt. However, prioritizing retirement savings and children's education should be balanced with personal financial needs.
