BBC Capstone Project Fall 2022

The Student Debt Relief application is live — why was it necessary in the first place?
By Bailey Britton

Student loans seem pervasive in modern day culture, but they haven’t always existed. The origins of student loans are complicated, which led to complicated policies that affect borrowers today.

Recently, President Joe Biden announced that the federal government will forgive student loans for some borrowers. Borrowers who did not receive a Pell Grant and make less than $125,000 — $250,000 for households — are eligible for up to $10,000 in relief. Borrowers who received a Pell Grant in the same salary range are eligible for up to $20,000 in relief.

But how did student loan debt become so pervasive that Biden proposed this plan?

The Student Debt Relief application is live — why was it necessary in the first place?
By Bailey Britton

Student loans seem pervasive in modern day culture, but they haven’t always existed. The origins of student loans are complicated, which led to complicated policies that affect borrowers today.

Recently, President Joe Biden announced that the federal government will forgive student loans for some borrowers. Borrowers who did not receive a Pell Grant and make less than $125,000 — $250,000 for households — are eligible for up to $10,000 in relief. Borrowers who received a Pell Grant in the same salary range are eligible for up to $20,000 in relief.

But how did student loan debt become so pervasive that Biden proposed this plan?

It all started when Sputnik was launched into the atmosphere.

At that time, Americans felt they had fallen behind in education compared to the Soviet Union. The Senate struggled to pass education bills, but decided that if the education bill was included in a defense bill, it might pass the Senate. Congress passed the National Defense Education Act 11 months later.

The National Defense Education Act focused mainly on STEM education. President Lyndon Johnson wanted to expand the opportunity for education to more people, as he himself grew up poor and benefitted from loans to attend college. Johnson pushed for the Higher Education Act, which was last extended in 2008.

At the time, the federal government didn’t loan directly to students. Instead, the government outsourced to banks but covered the losses if students did not pay back their loans.

College attendance skyrocketed in the 1960s and 70s, but so did inflation. In 1972, the U.S. Government created Sallie Mae, an entity that acted as the middleman between banks and the government. This continued until after the Great Recession in 2008.

In 2010, the government began loaning directly to students, cutting out the middleman, which is today's current practice.

On October 14, the Biden Administration officially opened the beta version of the Student Debt Relief application. The application will remain open until the end of 2023. The White House estimates that 40 million borrowers are eligible for debt relief.
It all started when Sputnik was launched into the atmosphere.