In a highly anticipated announcement, President Joe Biden announced student loan forgiveness measures.
Wednesday afternoon President Biden announced a three-part plan to alleviate the strain of student loan debt.
“I made a commitment that I would provide student debt relief, and I’m honoring that commitment today,” President Biden said in a press conference.
The plan will:
- Provide up to $10,000 in debt cancellation for non-Pell Grant recipients and $20,000 in debt cancellation for Pell Grant recipients if their individual income is less than $125,000.
- Reduce monthly payments for undergraduate loans and suggest changes to the Public Service Loan Forgiveness program allowing borrowers to more easily receive credit toward loan forgiveness.
- Advocate for higher Pell Grant options and encourage colleges and universities to keep their prices low.
The president also announced that the pause on student loan repayments would be extended to the end of this year.
Eliminating $10,000 from student loans could make up to 16 million borrowers student loan debt free, Forbes reported.
It is yet to be determined whether or not parents who took out loans on their children’s behalf will be eligible for the loan forgiveness, leaving some parents feeling slighted, Fox News reported.
Bankruptcy attorney Susan Williams said, “We have many parents come in with Parent PLUS loans that they are not able to pay.”
Why it’s news
The debt forgiveness could bring immediate relief to some. As many Americans contend with inflation driving prices higher, many are looking for ways to bring down everyday costs.
While some may find immediate relief, the loan forgiveness could increase already high inflation.
Economist Michael Pugliese says that increased savings and decreased debt levels could raise inflation by .1 to .3 percentage points, Bloomberg reported.
“In the grand scheme of things, that’s not huge. But inflation right now is at pretty alarming rates. At a time when the economy is already running too hot, it just threatens putting more fuel on the fire,” Pugliese said.
Many students today graduate college with $25,000 in student loan debt. Together, 45 million borrowers have a total of $1.6 trillion in debt.
Whether or not the measures announced today will actually help average Americans is yet to be seen.
What’s not being said
While the president’s announcement has been celebrated by some, President Biden has received a fair amount of criticism from his opposition as well as his own party.
“President Biden’s decision to waive student loan debt will increase inflation and is another gift to the rich. Tennesseans should not be forced to pay for coastal elites to get their PhD in gender studies,” Republican Tennessee Senator Marsha Blackburn tweeted.
Conservative commentator Matt Walsh said, “If you support this ‘student loan forgiveness’ it’s because you personally benefit. Just please admit that your support is selfish and you don’t mind taking from other people if it helps you.”
Still, others felt the president’s measures didn’t go far enough.
“They didn’t cancel PPP loans in part, they canceled them in full. Same should be done for student debt,” tweeted activist Nina Turner.
Democratic Vermont Senator Bernie Sanders said, “The average amount of debt forgiveness to businesses receiving PPP loans: $95,700. If we could afford to cancel hundreds of billions in PPP loans to business wonders in their time of need, please do not tell me we can’t afford to cancel all student debt for 45 million Americans.”