President Biden's student loan forgiveness plan "will make a huge difference to me, to a ton of people"
PHILADELPHIA (CBS) -- Relief is on the way for millions of Americans. President Joe Biden on Wednesday revealed a student loan forgiveness plan that will forgive up to $10,000 for most borrowers and up to $20,000 for Pell Grant recipients, who come from low-income families.
Eligible borrowers include individuals making less than $125,000, or $250,000 for couples. In addition, the federal student loan repayment moratorium will be extended until January 2023.
In canceling this debt, the Department of Education said the cost of college has nearly tripled since 1980 and that the average student graduates with $25,000 in education debt.
The president said he is using executive action to give Americans some breathing room.
"Rent is climbing, grocery prices are climbing," Carrie Ryan said. "This will make a huge difference to me, to a ton of people."
That money has likely already gone elsewhere since the initial student loan moratorium began in early 2020, but one young woman Eyewitness News spoke to says that money can help.
"Saving for the future could go toward a down payment on a house, buying a better car," Kirsten Klohr said. "A lot of things that would help my everyday life."
On Capitol Hill, there are detractors.
In response, Republican Sen. Pat Toomey issued a statement reading in part, "This decision will have wide-reaching, negative ramifications across America's economy, including increasing already disastrous inflation, exacerbating America's spending problems, and encouraging higher education institutions to raise the cost of going to college."
"Canceling student debt would also be grossly unfair to the Americans who worked hard to pay off their loans," Republican Sen. John Thune said.
Many others feel $10,000 isn't close to enough.
"Right now, student loan debt is holding back people who are trying to buy homes," Democrat Sen. Elizabeth Warren said. "It's holding back people who are trying to start small businesses. It's even holding back people who want to start families."
Philadelphia Mayor Jim Kenney said the plan will make a "real impact" on working and middle class families.
Providing student loan relief to working and middle class families will make a real impact in the lives of people across the country as they prepare to resume re-paying loans after the economic crisis brought on by the pandemic.
— Mayor Jim Kenney (@PhillyMayor) August 24, 2022
While loan forgiveness is expected to free up some money financial advisors say the real discussion needs to be on the financial burden of higher education.
"Going to college was the American dream and we're making that very unaffordable for low to moderate-income families in this country," EVERFI President Ray Martinez said.
Martinez is co-founder and president of EVERFI. They teach financial literacy to students and families before they get to college.
He says not only do colleges need to reduce tuition, but also students need to know what they're signing up for.
"Often times students are viewing these loans as grants or as rewards and low and behold you have 20, 30, 40,000 in debt," Martinez said.
Martinez says he does see a shift in people being more financially literate these days.
Eyewitness News also spoke to Michael Hayes, an associate professor of public policy at Rutgers University.
"It's really the eye of the beholder," Hayes said. "I think it comes down to sort of your perspective. I don't think you'll even win that argument. The one side that is for it will be able to make a subjective argument for it. And then the other side in terms of fairness will be able to come up with a subjective argument for why it's a bad policy."
An estimated 20 million Americans will have their student loan debt totally cleared.
Click here to see how you can qualify for student loan forgiveness under the president's plan.