The United States Supreme Court this Friday dealt a blow to the Joe Biden administration and tens of millions of university students with it. Its nine judges reversed the partial withdrawal of their loans granted by the Department of Education in the final sentence of the court case. The Supreme Court’s ruling hurts students with fewer financial means, mostly Latinos and African Americans. It is the second legal setback for these groups after the conservative majority of six-to-three Supreme Court judges on Thursday dealt a fatal blow to positive discrimination in university access based on applicants’ ethnicity. The same majority supported the new verdict.
The judgment also comes at a time when the three-year moratorium on the disbursement of these loans, imposed by the pandemic, is expiring. This moratorium expires in September and payments for the tens of millions of students benefiting from this pause will resume from October.
Joe Biden’s administration agreed to $10,000 in general debt forgiveness. The amount could be as high as $20,000 for recipients of Pell Grants, a widespread federal program of Department of Education loans that benefits some six million students from low-income families.
Borrowers were eligible for this partial waiver if their individual income was less than $125,000 ($250,000 for married couples), excluding the top 5% of the population. According to the White House, the decision could benefit up to 43 million people, including removing the entire balance for about 20 million.
Since 1980, the total cost of public and private four-year colleges has tripled, even adjusting for inflation. Pell Grants used to cover nearly 80 percent of the cost of a four-year public university degree for students from working families, but now they only cover a third. This has left many students from low- and middle-income families with no choice but to take out loans if they wish to pursue a college degree in a country where tuition fees are much higher than both public and private universities in the rest of the world . the developed countries.
The White House has argued that skyrocketing federal student loan debt — $1.6 trillion and rising for more than 45 million borrowers — is placing a significant strain on America’s middle class. “Middle-class borrowers are struggling with high monthly payments and growing balances that make it difficult for them to accumulate wealth through things like buying homes, saving for retirement and starting small businesses,” it says.
For the most vulnerable borrowers, the impact of leverage is even more devastating. According to a Department of Education analysis of a recent cohort of college students, nearly a third of borrowers have debt but no degree. Many of these students could not complete their studies because the tuition fees were too high.
The Department of Education estimates that about 16% of borrowers are in default, which can lead the government to freeze a borrower’s wages or downgrade a borrower’s credit rating, including nearly a third of seniors with student debt. Black borrowers are also disproportionately affected by their student debt burden. Twenty years after he first started school, the black student who entered college in the 1995-96 school year still had 95% of his original college debt.
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