President Joe Biden has introduced a plan to forgive up to $10,000 in student loan debt for Americans who earn under $125,000 per year ($250,000 for married couples filing joint returns). The plan would also forgive up to $20,000 in student loan debt for Pell Grant recipients with loans held by the Department of Education (also subject to the $125,000 per year earnings cap).
Biden's plan would continue the pause in student loan repayment obligations until January. The plan also includes new income-based repayment rules, so that payments would be capped at 5% of the borrower's discretionary income. Debt relief will not be treated as taxable income for recipients.
We asked two professors and authors of ALM's Tax Facts with opposing political viewpoints to share their opinions about President Biden's plan to forgive up to $10,000 in student loan debt for certain taxpayers.
Below is a summary of the debate that ensued between the two professors.
Their Votes:
Bloink
Byrnes
Their Reasons:
Bloink: Millions of Americans struggle under the weight of crushing student loan debt. Many student borrowers took out their loans without a full understanding of the terms or consequences. Now, they're struggling with sky-high payments and interest that's accruing rapidly, making it impossible for many of these borrowers to ever hope to repay their loans entirely. This plan would benefit millions of Americans who need help the most right now.
Byrnes: We're facing the highest inflation levels that we've seen in decades — both Republicans and Democrats should be acutely aware of that fact. American business owners are also struggling with an unprecedented labor shortage — and millions of Americans have simply left their jobs without worrying about paying back the student loans that they chose to take. Forgiving student debt outright isn't going to help with either of those issues. In fact, it will exacerbate both of them, making matters worse for our economy.
