Biden Promises Increases to the Federal Pell Grant for Citizens and Dreamers
Furthermore, Democrats have been pressing Biden to forgive student loans for a sum of $50,000. Biden thinks that this total is excessive. American taxpayers should not be the ones responsible for repaying such large sums of money. Because, in essence, most people who have higher student loan payments can be more than likely than not afford to pay those big loans off.
Biden does not want to subsidize private education recipients or the student loans for doctors and lawyers. The loan forgiveness would be social welfare for the middle to upper-middle class. Both Biden's children went to private colleges, and his children paid for their education with student loans. Since that time, his children have repaid their federal student loans.
Student Loan Forgiveness
On the other hand, Biden does want to forgive student loans that are $10,000 or less. This amount represents the majority of student loan borrowers. Since student loan borrowers owe $1.7 trillion in student loans, Biden forgiving $10,000 in student loans would reduce the $1.7 trillion in outstanding debt to $1 trillion.
Watchdogs keep calling on Biden to do more than forgive $10,000 in student loans. This type of forgiveness primarily assists a student who, for one reason or another, could not finish their education or they enrolled in a for-profit college which promised good-paying jobs upon graduation, only to close their doors to future enrollment.
Additionally, most students who owe $10,000 in student loans, probably enrolled in public higher education institutions. Biden may consider increasing his offer to eliminate more of the student loan burden. Democrats in Congress said that Biden, through executive action, can forgive student loans with the stroke and the signature of his presidential pen.
Biden is hugely cautious and is considering all his options for student loan forgiveness. He has delegated a committee to investigate and promulgate presidential authority through legal memoranda. Many student loan borrowers can expect to hear Biden's final decision on student loan forgiveness by the latter half of the year.
Many government forgiveness programs require the borrower to report their forgiven debts as income on their tax returns. With such an extensive, proposed government forgiveness program, many borrowers hope they won't find themselves in a situation whereby they must pay the IRS an unexpected hefty tax bill.
Congress has mentioned that once student loan borrowers obtain their loan forgiveness, they will not have to mention their forgiven amounts on their tax returns. The forgiven loans would be handled so that students would not report the various amounts on their tax returns as credits or income. This would give student loan recipients a need reprieve. As a bonus, since borrowers will not be making monthly student loan payments, the local and national economy would receive a much-needed financial boost.
Meanwhile, Biden is exercising his presidential authority by expanding the Pell Grant award. The financial reward will increase by $400. If accepted by Congress, this would be the largest increase in federal grants in 12 years.
For the 2021-2022 school year, which begins on July 1, students can receive a maximum Pell Grant award of $6,495. Award amounts may vary depending on every student's financial situation as represented by the annual FAFSA form "Free Application for Federal Student Aid" for dependent and independent students.
The Grant Increase
The increase in Pell Grant eligibility was included in Biden's new budget proposal. He wants Congress to approve an Education budget of $3 billion. From this proposal, $102 billion would be earmarked for the increased grant proposal, this is a 41% increase from the previous year.
Typically, recipients of Pell Grants have exceptional financial needs. Unlike a student loan, students would not repay the government for the Pell grant.
Biden said, "To help shrink racial gaps in higher education" the discretionary request takes a significant first toward doubling the Pell Grant by proposing to increase the maximum grant by $400. This would potentially take effect on the next federal fiscal budget of October 1, 2022.
Undocumented immigrants, like the Dreamers, would also be eligible for the new Pell Grants. Former President Obama commenced the DACA program or Deferred Action for Childhood arrivals to benefit undocumented children who came to the USA illegally, at no fault of their own.
DACA arrivals can stay in the USA, subject to periodic immigration application renewals. Presently, DACA recipients are not eligible for any Federal student loans or grants.