President Joe Biden is expected to announce student-loan forgiveness measures Wednesday.
President Biden’s long-anticipated announcement is expected to come Wednesday. The exact details aren’t yet known, but the President has been considering options such as $10,000 forgiveness per borrower, excluding borrowers who make more than $125,000 to $150,000 a year.
Some anticipate that President Biden will extend the student-loan payment pause until the end of this year in addition to a certain amount of debt forgiveness for borrowers below a certain income level. The current pause is set to expire at the end of August.
With rapidly growing inflation, the decision is under intense scrutiny from both sides of the aisle, with some insisting relief is needed while others argue the relief will ramp up already crushing inflation.
It’s likely no matter what announcement the President makes, he will receive pushback from both sides. Those in favor of loan forgiveness have been pushing for more than the expected $10,000 to be forgiven. Opponents don’t want any forgiveness or moratoriums.
Why it’s news
Student-loan forgiveness could be a major point for the President before midterms. He’s already accomplished a few of his major goals through the Inflation Reduction Act which addresses taxes, healthcare, and climate issues.
Student-loan forgiveness would be a costly endeavor. Depending on the extent of forgiveness, it could cost somewhere between $300 billion and $980 billion over 10 years. The majority of borrowers are in the top 60% of income earners, Bloomberg reports.
Already the Biden administration has canceled around $32 billion in student loan debt.
What’s not being said
The student-loan holders who pay back their loans in full consider forgiveness unfair. If they have to repay loans, why should everyone not repay loans?
Many argue as well that student-loan forgiveness is inflationary. “Student loan debt relief is spending that raises demand and increases inflation,” former Treasury Secretary Larry Summers said on Twitter.