President Joe Biden announced on Wednesday that he will forgive He delivered $10,000 in federal student loans to most borrowers, fulfilled his campaign promises, and brought financial relief to millions of Americans.
Biden cancels up to $20,000 for Pell grant recipients.
“Both of these targeted actions are for the families who need them most,” the president said in a statement at the White House Wednesday afternoon.
Relief limited to American income Less than $125,000 per year, or $250,000 for a married couple or head of household. The relief is also capped on the amount of the borrower’s outstanding eligible debt. Department of Education.
so does the president Extend payment suspension “One last time” for most federal student loans through Dec. 31, 2022, according to the tweet.
Biden said 95% of borrowers, or about 43 million people, would benefit from the plan. More than 60% of those are Pell Grant recipients.
About 45% of borrowers, or about 20 million people, will write off their debts completely, Biden said.
“20 million people can start living now,” Biden said.
“This all means that people can finally get out from under the mountain of debt. To get over rent and utility bills. Finally buy a house or start a family or start a business.” I think of
Biden’s decision to cancel $10,000 in student loans for borrowers earning less than $125,000 will cost the federal government about $244 billion, according to higher education expert Mark Kantrowitz. Her $20,000 bailout to Pell grant recipients could increase government costs by about $120 billion.
Unprecedented action by White House to wipe out hundreds of billions of dollars in consumer debt continues Years of Advocacy Pressure and the last few months Heated debate among Biden administration officials.
These arguments focus on how student loan forgiveness will affect high inflation hitting Americans’ wallets, how much student loans should be canceled, and If the president even had the power to reduce the public budget without a legislative branch.
Details from Personal Finance:
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The impending midterm elections in November put pressure on the government to make a decision. Advocates say allowing student debt would irritate younger voters. Biden is losing popularity in itto vote.
The president was under pressure to cancel more than $50,000 per person, including Senate Majority Leader Chuck Schumer (DN.Y.) and groups such as the NAACP, but was forced to pay off all borrowers’ massive debts. It has repeatedly expressed its reluctance to clean up.
The “student loan crisis” has become a buzzword among politicians and households across the United States.
More than 40 million Americans are in debt for their education, with a cumulative debt of $1.7 trillion, far more than outstanding credit card and car debt. Rising higher education costs combined with stagnating wages Student loan amounts that people graduate from skyrocket. Today’s average balance has grown from $12,000 in 1980 to over $30,000.
Before the pandemic, when the U.S. economy was enjoying one of the healthiest periods in its history, problems plagued the federal student loan system.
Kantrowitz estimates that only about half of borrowers were repaid in 2019. A quarter, or he had more than 10 million delinquent or in default, and the rest had applied for temporary relief for struggling borrowers, including deferrals and deferrals. .
These hard numbers are 2008 mortgage crisis.
“The student loan system is collapsing,” said Persis Yu, policy director at the Center for Student Borrower Protection.
Democrats and Republicans say the federal student loan system is deeply flawed. Experts say problems quickly arise when students take out loans, leading to even more repayments. among them:
- Lenders contracting with the U.S. government have been accused of misleading borrowers and misleading them unnecessarily. expensive and long tolerance.
- Due to the extraordinary collection powers of the federal government, hundreds of thousands of veterans and older Americans who are behind on their student loans regularly have part of their benefits seized.
Research shows that student debt prevents individuals from starting a business, saving for retirement, and buying a home.
As a result, debt forgiveness could change the trajectory of tens of millions of Americans’ lives.
Seeking broad student loan forgiveness Occupy Wall Street dates back to the movement It was 2011, just before the education debt exceeded $1 trillion.
At the time, proponents began to question why corporations should get debt relief from the government, but ordinary Americans seeking education did not.
In the 2020 Democratic primary, Sen. Elizabeth Warren, Democrat of Massachusetts, developed a plan Allow $50,000 to almost any borrower on his first day in office. Senator Bernie Sanders (I-Vt.) went even further and promised to write off all his debts if he made it to the White House.
Over the course of the campaign, Biden took a more conservative approach than his left-wing rivals, voicing support for a $10,000 student loan forgiveness. But during his tenure, the president has come under constant pressure from Democrats and supporters for deeper relief.
Wisdom Cole, National Director of the NAACP’s Youth and College Division, said that for black borrowers, who often have to borrow more than whites due to racial wealth disparities, deducting just $10,000 is a “slap in the face.” ‘, he said.
The announcement is sure to anger many Americans, including those who have never borrowed money for their education or gone to college. Republican Rep. Kevin Brady recently called for student loan forgiveness.”Gifts for highly educated college graduates.” some Republicans He said he was trying to block the president’s efforts to cancel the debt.
Critics of student loan forgiveness question the fairness of directing the relief to those who have benefited from a college education, which usually leads to higher wages.
Beth Akers, a senior fellow at the center-right American Enterprise Institute, said, “Economists generally believe that widespread loan cancellations are retrograde and offer the greatest relief to those who need it least. I agree to provide
Forgiveness will only exacerbate the lending crisis, Akers added.
“The president is sending the wrong message to prospective borrowers who are more likely to expect bailouts for themselves in the future.”As a result, Americans may end up in debt and pay more for college. not.”
But proponents say framing student loan forgiveness as a subsidy for the wealthy is a misunderstanding of the deep and historic inequalities of the American economy.
Mushroom tuition, coupled with stagnant household wages in the past 40 yearsThey argue that more and more families are being forced to borrow to attend college, an increasingly necessary step to reach the middle class.
“All those fat cats and people who never want to see working people or helping the poor come up with these myths,” Schumer said in June. one of his many pushes $50,000 in cancellation of student debt.
“This is not a wealthy issue,” Schumer said.