• On Wednesday, President Joe Biden announced long-awaited student loan forgiveness.
  • He canceled $10,000 in loans for federal borrowers, and $20,000 for Pell Grant recipients.
  • Insider spoke to two debtors who will see all of their debt wiped out from the announcement.

Jaymie Horak's life changed this week.

The 31-year-old in Portland, Oregon, took out $50,000 in Pell Grant loans to put themself through college. Horak was a first-generation university student, and, beyond the academic grants they received, there was "literally nothing at all" to help them pay their for the rest of school other than loans.

Pre-pandemic, Horak, who works in HR, had paid down their loan burden to about $20,000. The payment pause meant they were able to save and put a down payment on a condo, but they feared they wouldn't be able to afford their mortgage when student-loan payments resumed.

Then came the news on Wednesday: President Joe Biden was forgiving their entire student-loan debt.

"When I saw the 20,000 for people who had the Pell Grant, I like lost it," Horak said. "I couldn't believe it."

Horak is one of the approximately 20 million borrowers getting their entire student-loan debt forgiven. In a long-awaited announcement, Biden confirmed he will be canceling up to $20,000 in student debt for Pell Grant recipients making under $125,000 a year, and other federal borrowers will be eligible for up to $10,000 in relief. That, coupled with Biden's fifth extension of the student-loan payment pause through December 31, gave millions of borrowers much more breathing room. Some say it will change their lives.

Aidan Smith. Foto: Aidan Smith

Aidan Smith, a recent college graduate and Pell Grant recipient living in New York who is getting his remaining $7,000 balance wiped out, told Insider that he recognizes how lucky he is to have attended community college and accrued a manageable student debt balance. For him, Biden's announcement was an indicator of how people's lives "are going to transform."

"They're going to get a fair shot to go forward without having to experience this really brutal, debilitating student debt," he said. And while he wishes Biden could have gone further to alleviate the burdens of those with higher debt loads, Smith said this money back in his pocket will allow him to afford future investments. 

"When I saw the whole amount, the entire balance,  I was elated, relieved, and I felt like, wow, it's kind of the first time I've ever felt directly impacted by something like a political order or passing of something," Horak said. "This was the most direct it's ever impacted me."

U.S. President Joe Biden, joined by Education Secretary Miguel Cardona, speaks on student loan debt in the Roosevelt Room of the White House August 24, 2022 in Washington, DC. President Biden announced steps to forgive $10,000 in student loan debt for borrowers who make less than $125,000 per year and cap payments at 5 percent of monthly income. Foto: Alex Wong/Getty Images

'I get to not worry about losing my home'

During the pandemic, Horak wanted to move, and even try to buy a home — something that felt impossible as someone from San Diego. In the back of their head was Biden's campaign promise to cancel $10,000 per borrower, although they were skeptical about that coming to fruition.

"I was like, okay, I'm not going to put stock into it, because it feels hopeless," they said. "But like maybe, maybe, so I just kept waiting." They decided to take a risk, and go for home ownership while their $20,000 in loans remained untouched during the pandemic payment pause.

"I had a moment earlier this year where I was deciding, do I do a down payment on a condo or do I pay off my loans?" they said. They went with the down payment.

Horak isn't alone in the anxiety they were feeling leading up to Biden's announcement. Not only were borrowers facing difficulties financially planning over the course of the pandemic due to the uncertainty of relief — Biden also waited until just one week before student-loan payments were scheduled to resume to deliver loan forgiveness, keeping borrowers on the edges of their seats until the last minute. 

"I honestly don't know what would've happened if they had restarted and I had to pay what I was paying before. The biggest thing for me is that I get to not worry about losing my home," Horak said.

'I'm not being given anything. This is a loan that never should have been given to start.' 

Some conservatives have decried the relief as unfair, and positioned cancellation as something that will now burden other taxpayers.

"Sad to see what's being done to bribe the voters," Senator Mitt Romney, a Republican from Utah, tweeted. "Biden's student loan forgiveness plan may win Democrats some votes, but it fuels inflation, foots taxpayers with other people's financial obligations, is unfair to those who paid their own way & creates irresponsible expectations."

It's an argument that Biden has rebuked, asking in turn if it's fair for taxpayers to subsidize tax breaks for billion-dollar businesses. It's also an argument that debtors seeing relief are fending off.

"I think some people feel like these are being paid for by the taxpayer, and that it's being taken from them," Horak said. They noted that they are a taxpayer, and that many programs — including Social Security, food stamps, and tax breaks for businesses — are funded by taxpayers who don't use them. 

"I actually had an argument with somebody very close to me who replied, like, you need to give your family 10,000 of that. I'm not being given anything. This is a loan that never should have been given to start," Horak said. "This never should have been approved. I was 18. I came from a low income family. I couldn't get a store card for $500, but I ended up being able to take $50,000. Anybody who looks at that should be able to see something's wrong here."

Despite conservative critiques of Biden's broad relief, Smith said the president's announcement was "really strong policymaking," especially due to its focus on low-income borrowers like Pell grant recipients. He thinks it will make significant strides for Democrats at the polls in November.

"I think people respond really positively when their material circumstances improve," Smith said. "I think that this will call both young people and so many suffering with such debilitating debt to the polls, and will be such a crucial part of the Democratic coalition going forward."

Ultimately, Horak said, the forgiveness feels like almost an apology for the help they didn't receive before.

"I've always felt like I just have to figure it out. I just have to work with a system that is predatory and going to take advantage of me left and right. I have to make sure I know five steps ahead," they said. "To have something come, that was like, actually you're okay right now, we're going to take care of this — it feels unreal."

Read the original article on Business Insider