Biden Cancels Up To $20,000 Per Borrower In Student Loans
In a speech delivered from Washington DC on Wednesday, August 24th, president Bident announced his long-awaited plan to lessen the burden of student loans. The plan is primarily aimed to help lower-income graduates and came together with another extension of the payment hiatus—the 7th one since the covid-19 pandemic began in 2020.
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What Does Biden’s Plan Entail?
- The Biden Administration plan entails the forgiveness of $10,000 for borrowers who earn less than $125,000.
- The plan also involves forgiving $20,000 for Pell grant recipients who earn less than $250,000.
- The President also announced another freeze on loan payments. The current one expires on August 31st, and the new one will last until December 31st.
- The Administration argues that the plan will mostly help low-income people, with 90% going to those earning less than $75,000
- The plan is in line with Biden’s campaign promises. Progressives consider the $20,000 for Pell grant recipients a major win.
- The plan will benefit up to 43 million people and another 20 million could have their debt completely cancelled.
- Throughout the year, the Biden administration approved the forgiveness of around $32 billion in student loans.
- The total US student debt has become greater than $1.7 trillion in 2022.
- The President announced that the plan is possible due to significant deficit reductions achieved last year, and additional deficit reductions expected in the current fiscal year.
- Under the new student loan program, no one is to pay more than 5% of their income per month.
- The Biden Administration also announced the plan to reform the public service forgiveness program and to put colleges under more scrutiny when trying to increase tuition.
- The Department of Education will announce the guidelines on how to apply for the loan forgiveness program within a few weeks.
- According to a recent study, student loan forgiveness might cost up to $980 billion over the next 10 years.
- While Biden’s announcement has been much anticipated and has many supporters, some fear it might exacerbate inflation and lead to higher tuition fees.
- The plan is expected to boost the support for the Democratic Party in the upcoming midterm elections.
Do you think the anticipated student debt forgiveness will increase inflation further? Let us know your thoughts in the comments below.