For millions of Americans who make less than $125,000 annually, US President Joe Biden will forgive up to $10,000 (£8,474) in federal student loans. For students receiving Pell Grants—those with the greatest financial need—Mr. Biden will also waive $20,000 in debt.
People may now “get out from under that debt mountain,” he said.
Federal student debt is owed by 43 million Americans, amounting to $1.6 trillion in total. One-fifth or less owe less than $10,000. The temporary student loan halt, which was initially implemented in March 2020, will also receive one final extension until December 31 of this year.
On Wednesday, Vice President Biden stated in remarks from the White House that his proposal would provide working- and middle-class people more “breathing room.”
“The load is so enormous that even if you graduate you may not have access to the middle class life that the college degree formerly provided,” he added, remembering the guilt his car salesman father felt when he battled to pay for his children’s education.
According to Mr. Biden, one-third of debtors do not have degrees but do have student debt. The worst possible situation After an extended period of heated internal debate within the White House and increasing pressure from progressive Democrats, the announcement was made. Leading Democrats Senators Elizabeth Warren of Massachusetts and Chuck Schumer of New York asked Vice President Biden to utilise his presidential authority to forgive borrower debts.
The proposal from Wednesday falls short of the $50,000 per borrower request made by Mr. Schumer and Ms. Warren. The Penn Wharton budget model at the University of Pennsylvania estimated that a one-time cancellation of $10,000 for each borrower earning up to $125,000 would cost the federal government about $300 billion.
On Wednesday, Mr. Biden responded to this criticism by asserting that his idea for student loan forgiveness is the “economically sensible route.” He continued, “I will never apologise for aiding working Americans and the middle class,” adding that “no high-income individual or high-income household would profit from my move.”
According to Republicans and some moderate Democrats, debt elimination will increase inflation since it will give Americans more money to spend. Others claim that granting universal debt forgiveness is unfair to people who have already repaid their education loans.
Republican Californian Kevin McCarthy, the leader of the House minority, swiftly criticised the proposal on Twitter: “Who will be held accountable for Biden’s debt transfer fraud? American workers who have previously paid off their obligations or who have never had student loan debt in the first place, “He wrote.
Democratic legislators have resisted, arguing that forgiving student loans helps address racial economic gaps.
Black students are more likely than other Americans to borrow federal student loans, and they tend to borrow larger amounts. Black borrowers owe, on average, roughly $25,000 more than their white counterparts four years after receiving bachelor’s degrees, according to a Brookings Institution research.
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