One of the most evident advantages that comes with a 10,000 to 20,000 debt reduction is a radical shift in financial lives of millions of borrowers. There are more than 8 million Americans who will have their student loan debt forgiven in full if Biden’s plan comes into reality. Being one of the causes of stress for fresh grads, student loan debt sets back plans for big purchases and affects major life decisions, such as buying property or starting a family. The proposed reduction in student loan debt might save some borrowers years of their lives, giving them the opportunity to explore and find their passion right after college. Also, there is a correlation observed between high student loan and numerous health problems and psychological disorders, the effect of which will become less severe with the government’s help towards paying student debts off.

Additionally, significant reduction in one’s debts can lead to a growing momentum in gradual recovery from the debt spiral. According to a study conducted in 2021, it has been shown that an average American has more than 90,000 in consumer debt, which is usually a combination of mortgages, helocs, student loans, and credit card loans. Reducing payments for one of the loans can both serve as a good psychological stimulus to keep knocking down the rest of one’s loans and make room for larger, thus faster, repayments for more substantial loans. More often than not, student loans come with very flexible repayment plans, which might seem like a suitable idea for a young professional looking for a stable job that would pay the fees in the future, but they turn out to be the ones coming with highest risks and highest amounts repaid at the end. 

Biden’s plan might also start off a wave of increased interest in student benefits. On average, pursuing higher education in most fields increases one’s income by 84% after bachelor’s degree and by 20% after master’s degree. Nevertheless, certain fields do not enjoy such substantial paycheck increase, and getting a degree in such field might even worsen one’s financial position, with student loan repayments outweighing the wage increase. This is one of the reasons behind a hesitation to spend years at college and thousands of dollars on a degree that might even put you in more debt. In such circumstances, Biden’s plan can be a cushion that would prevent the mistakes from hurting too bad. Benefiting from such a contribution towards their loans, graduates can alleviate the risks of either not finding a well-paying job or not finding a job at all. Furthermore, without the need to make considerable payments towards the debt right after college, young people can have more freedom in choosing what they would actually enjoy over what pays the bills. 

Lastly, Biden’s plan can become a big step towards decreasing the racial wealth and income gaps. Following a study conducted in 2018, there is an 8-fold gap between a typical white and a typical black household. For numerous reasons, most of the America’s wealth is predominantly in hands of white households, leaving students from black backgrounds more prone to get themselves into debt. According to the plan’s policy, only the one’s making less than a certain amount a year might qualify for the debt reduction. The lack of generational wealth is already putting most black households at a big disadvantage; therefore, giving the poor communities more room to breathe with their finances can give a good push for especially black and Latino communities to start catching up.