In an effort to address the long-standing issue of the nation’s staggering student debt, President Joe Biden stated on Wednesday that most Americans who are trying to repay their university loans will have $10,000 erased off their debts.
Less than three months remain before the November congressional elections, when the subject is considered as a vote-winner for Democrats, Biden said in a statement, “In keeping with my campaign commitment, my administration is announcing a proposal to provide working and middle class families breathing room.”
Later, in an address from the White House, Biden referred to the help as “a game changer.”
All of this means that people can now begin to emerge from the debt mountain, he added. “The entire economy benefits when this occurs.”
Republicans reject the proposed debt relief because they feel that any reduction in loan payments would be unjust to individuals who have already spent years saving to pay off their own obligations. The proposed debt relief falls far short of the complete forgiveness sought by some Democrats.
The question of whether effectively injecting millions of people with cash will fuel the already raging inflation sparked quick debate.
Former White House economic adviser Jason Furman stated on Twitter that it is foolish to “throw nearly half a trillion dollars of fuel on the inflationary fire that is already raging.”
Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless. Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse.
— Jason Furman (@jasonfurman) August 24, 2022
While admitting he “won’t please everyone,” Joe Biden justified the decision as “economically reasonable” and claimed research indicated there wouldn’t be any “significant influence on inflation.”
The cost of the debt cancellations was not disclosed by the White House, which said it would depend on how many people took advantage of the offer.
Amarie Betancourt, a journalism student at historically Black Howard University, stated, “If everything goes through, it would be absolutely amazing.”
Betancourt, 20, said that when Biden ran for president, he had pledged to reduce student loan debt, adding, “I think that’s why a lot of people my age and within my generation voted for him.”
Debt of $1.6 trillion
The average cost of a college education in the US is between $10,000 and $70,000 per year, leaving some graduates with crippling debt when they start their careers.
According to government estimates, US college graduates graduate with an average debt of $25,000, which will likely take many years or perhaps decades to repay.
According to the White House, around 45 million borrowers nationwide owe a combined $1.6 trillion.
According to government statistics, 5 percent of debtors who are elderly and still have college debt are under 25 percent of those who are eligible for relief, but more than a third are over 40.
All loans due by borrowers making less than $125,000 in annual income would have $10,000 subtracted from them as part of the relief package. The compensation will amount to $20,000 for pupils who attended college with need-based government aid known as Pell grants.
In all circumstances, the pardon will only be granted to current or previous students who apply. Additionally, the program is only available to borrowers whose loans were taken out before June 30 of this year.
A moratorium on debt repayments that was put in place during the Covid-19 outbreak will also be extended through the end of the year, with installments beginning up again on December 31. Biden claimed that this will assist bring in more money to help pay for the forgiveness program.
According to Bharat Ramamurti, deputy director of the White House’s National Economic Council, “It’s going to be billions of dollars a month in payments coming into the federal government.”
Giant forward Pace
After months of deliberation in the White House on how to navigate a problem that has plagued previous administrations, a proposal was finally unveiled.
The senior Senate Democrat, Majority Leader Chuck Schumer, and members of the party’s left have been putting pressure on Biden to act for months.
In a joint statement with other top lawmakers, Schumer stated, “President Biden has taken a huge step forward in tackling the student loan crisis by canceling significant sums of student debt for millions of borrowers.”
Families around the nation would benefit from this change, especially those who live in minority neighborhoods, according to the statement.
But Ronna McDaniel, leader of the Republican National Committee, referred to the proposal as a “bailout for the wealthy.”
“As hardworking Americans struggle with soaring costs and a recession, Biden is giving a handout to the rich,” she claimed.
“Joe Biden’s bailout unfairly punishes Americans who saved for college or made a different career choice, and voters see right through this short-sighted, poorly veiled vote-buy.”