Biden cancels $10,000 in federal student debt for most borrowers

President Joe Biden announced Wednesday that he will forgive $10,000 in federal student debt for most borrowers, making campaign pledges and providing financial relief to tens of millions of Americans.

Biden will also cancel up to $20,000 for Pell Grants recipients, he said in a tweet on Wednesday.

The relief will be limited to Americans earning less than $125,000 per year, or $250,000 to married couples or heads of household. The relief is also limited to the borrower’s unqualified debt, each Ministry of Education.

The president will also extend the payment pause on most federal student loans “one last time” through December 31, 2022, according to the tweet.

The White House’s unprecedented action to wipe out hundreds of billions of dollars in consumer debt years of exercise pressure and the recent months of heated debate among Biden administration officials.

Those discussions focused on how student debt forgiveness might affect how high inflation affects Americans’ wallets, how much student debt should be canceled, and how much student debt should be canceled. if the president even has the power to reduce the weight of the people without the legislative branch.

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The upcoming midterm elections in November have put additional pressure on the administration to make a decision. Advocates have said student loan forgiveness will encourage younger voters, whom Biden has gradually lost popularityto opinion polls.

Although the president has been pushed to cancel $50,000 or more per person, including groups like the NAACP and Senate Majority Leader Chuck Schumer, DN.Y., he has repeatedly expressed reluctance. in writing off the bulk of that debt to all borrowers.

More than 40 million Americans are in school debt, $1.7 trillion in cumulative debt, a balance that far exceeds credit card debt or unpaid auto debt. The skyrocketing cost of higher education coupled with stagnant wages has caused The amount of student debt that people graduate with skyrocketed. Today, the average balance is more than $30,000, up from $12,000 in 1980.

Before the pandemic, when the U.S. economy was going through one of the healthiest times in its history, problems persisted with the federal student loan system.

According to Kantrowitz’s estimates, only about half of borrowers were able to repay their loans in 2019. A quarter – or more than 10 million people – were in breach of the law or in default, and the rest had already filed applications. apply for temporary relief for troubled borrowers, including deferrals or loans.

These grim numbers lead to comparisons with mortgage crisis of 2008.

“The student loan system is broken,” said Persis Yu, policy director at the Student Borrower Protection Center.

• Lenders contracted with the US government have been accused of deceiving borrowers and bringing them in expensive and long rings.

• The federal government’s unusual arrears powers mean that hundreds of thousands of veterans and older Americans who have been laid off on their student loans have had part of their benefits permanently cut off.

Research shows that student debt prevents individuals from starting businesses, saving for retirement, and buying their own home.

As a result, debt forgiveness has the potential to change the life trajectory of tens of millions of Americans.

Call for forgiveness for student loans generously return to the Occupy Wall Street movement in 2011, just before the education debt backlog exceeded $1 trillion.

At that point, advocates began to question why companies should get bailouts from the government for their debt and not everyday Americans already looking for an education.

In the 2020 Democratic primaries, Senator Elizabeth Warren, D-Mass., come up with a plan to forgive $50,000 to almost all the borrowers on her first day in office. Senator Bernie Sanders, I-Vt., went even further, promising to cancel the entire debt if he made it to the White House.

On the campaign trail, Biden has taken a more cautious approach than his opponents on the left, going out to support $10,000 in student debt relief. While in office, however, the president has come under constant pressure from Democrats and advocates for deeper relief.

Wisdom Cole, national director of the NAACP’s youth and college division, said that just having $10,000 would be “a slap in the face” for Black borrowers, who often have to borrow than their white counterparts because of racial disparities between rich and poor.

This announcement is sure to aggravate many Americans, including those who have never taken out a loan to study or go to college. Rep. Kevin Brady, R-Texas, ranking member of the House Ways and Means Committee, recently called for student loan forgiveness”a gift for highly educated college graduates. ” Some Republicans have said they will try to block the president’s attempt to cancel the debt.

Critics of student loan forgiveness have questioned the fairness of directing relief to those who benefit from college, which often leads to higher wages.

“Economists generally agree that broad loan cancellations are regressive, providing the biggest relief for those who need it,” said Beth Akers, a senior fellow at the Center for American Enterprise Institute. who need it least.”

Akers added that forgiving will only exacerbate the lending crisis.

“The president is sending the wrong message to future borrowers who will likely expect their own bailout going forward,” she said. “As a result, Americans can borrow and pay more for college.”

Advocates, however, have said that treating student loan forgiveness as an aid to the well-off is a misnomer of the deep and historic inequality of the American economy.

Tuition prices have risen along with stagnant household wages in recent times 40 yearsMore and more families, they argue, are forced to borrow to attend college, an increasingly necessary step in reaching the middle class.

“All these fat cats, and people who never wanted to see help for working people and needy people come up with these myths,” Schumer said in June, in one of his many hits for $50,000 in student debt cancellation.

“This is not a matter of rich people,” Schumer said.

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