Thursday 14 March 2024

Biden’s budget request for fiscal 2025 includes $12 billion for student loan forgiveness

 President Joe Biden has unveiled his proposed budget for the 2025 fiscal year, set to begin on Oct. 1, and in it, he is calling for $12 billion in spending to forgive student loans.

The proposed $12 billion is set to go to a new federal program called Reducing the Costs of College Fund that would support federal strategies to improve college graduation rates and make costs more affordable for students.  

Along with funding ways the executive can lower college costs and improve graduation rates, the $12 billion will go toward increasing the maximum that Pell Grant – federal subsidies for college attendees – awardees receive to $8,145.

The proposed budget will also allow the federal government to offer tuition-free rides through community college and eliminate origination fees, or fees charged by lenders for processing a borrower's loans.

Finally, the $12 billion proposal will fund other student debt cancellation measures into a $3.7 billion state and local safety proposal.

In addition to the $12 billion specifically set aside for the Reducing the Costs of College Fund, Biden is also asking for the Department of Education's budget to be increased to $82 billion, a $3.1 billion increase from the 2023 level. The White House claims the funding boost would address a range of early and higher education priorities.

This request includes $2.7 billion allotted for the Federal Student Aid office – a more than four-fold increase from its 2023 budget of $625 million – "to provide better support to the 46 million student loan borrowers and make additional and necessary improvements to the new servicing system."

The extra funding allows Federal Student Aid to continue its efforts to modernize the country's student loan repayment systems and to streamline the receiving of applications for FAFSA, or Free Application for Federal Student Aid, a form completed to determine a student loan borrower's eligibility for federal financial aid programs.

Republicans unlikely to agree with Biden's taxpayer-funded programs

The White House claims this proposed $12 billion shows Biden's dedication to reforming the student loan system and emphasizing higher education as a gateway for working-class Americans to move up to the middle class, rather than the obstacle that it has now turned into due to high costs.

"Already, the president has canceled more student debt than any president in history, approving debt cancellation for nearly four million borrowers through more than two dozen executive actions," reads the White House's statement. This proposal comes after the Biden administration has already canceled over $137 billion in student loans.

Under Secretary of Education James Kvaal claimed that Biden's budget proposal "will go even further in addressing the student debt crisis and promoting upward mobility for education."

It is uncertain whether all of these proposals will pass, as many of the initiatives in Biden's budget requestrequire congressional approval. With Republicans holding a majority in the House, it is unlikely any of these plans will pass in their current form.

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