President Joe Biden said on Wednesday that he will forgive federal student debt for most borrowers, fulfilling a campaign pledge and delivering financial relief to tens of millions of Americans.
Biden said that he would cancel up to $20,000 for recipients of the grants.
The relief will only be available to Americans who earn under $125,000 per year. The relief is capped at the amount of eligible debt a person has.
Most federal student loans will be paused for one final time through December 31, 2022, according to the president.
According to a higher education expert, around 9 million borrowers could have their balances completely cleared by Biden.
Biden's decision to move ahead with $10,000 in student debt cancellation for borrowers who make less than $125,000 will cost the federal government $244 billion. Around 120 billion dollars is added to the government's costs due to the $20,000 in relief for Pell Grant recipients.
The unprecedented action by the White House of wiping out hundreds of billions of dollars in consumer debt is the result of years of advocacy pressure and heated debate within the Biden administration.
There were discussions about student loan forgiveness, the amount of student debt that should be canceled, and if the president had the power to reduce people's balances.
Personal finance discusses how inflation can hurt and help consumers. The raises may be the biggest since the Great Recession.
The administration was under a lot of pressure to make a decision. Biden has been losing popularity among younger voters and forgiveness of student debt is seen as a way to get them to vote.
The NAACP and Senate Majority Leader Chuck Schumer had urged the president to cancel more than $50,000 per person, but he had resisted.
Politicians and people in households across the U.S. use the term "student loan crisis" to describe it.
More than 40 million Americans are in debt for their education, with a cumulative debt of over $1 billion. Student debt has gone up due to skyrocketing higher education costs and stagnant wages. The average balance has gone up from $12,000 in 1980.
There were still problems with the federal student loan system when the U.S. economy was enjoying one of its healthiest periods.
According to an estimate, only half of borrowers repaid in 2019. More than 10 million people were in some form of default or delinquency, and a quarter applied for relief from their loans.
Comparisons were made to the 2008 mortgage crisis.
The student loan system is broken according to the policy director for the Student Borrower Protection Center.
Major flaws in the federal student loan system have been pointed out by both parties. As soon as students take out loans, there are problems to contend with. They are among them.
Student debt makes it hard for people to start businesses, save for their retirement and buy homes.
Tens of millions of Americans are likely to change their lives because of debt forgiveness.
When outstanding education debt surpassed $1 trillion, calls for forgiveness of student loans began.
At the time, advocates began to question why corporations should get a handout from the government, but not the average American.
On her first day in office as president, Elizabeth Warren will forgive most of the loans she has taken. If he made it to the White House, the senator from Vermont said he would cancel all of the debt.
On the campaign trail, Biden came out in favor of student loan forgiveness, which was more conservative than his rivals. The president has been under a lot of pressure to deliver.
nixing just $10,000 would be a slap in the face for Black borrowers, who often have to borrow more than their white peers because of the racial wealth gap.
Many Americans, including those who never borrowed for their education, will be upset by the announcement. Republicans will try to stop the president from canceling the debt.
The fairness of directing relief at those who have benefited from a college education has been questioned by critics of student loan forgiveness.
Beth Akers is a senior fellow at the American Enterprise Institute.
The lending crisis will only get worse as a result of the forgiveness.
Americans may borrow and pay more for college as a result.
She said that the president was sending the wrong message to future borrowers who would expect their own rescue in the future. Americans might borrow and pay more for college.
Student loan forgiveness can be seen as a handout to the well-off, according to advocates.
They argue that mushrooming tuition prices coupled with stagnant household wages have forced more and more families to borrow to attend college to reach the middle class.
Schumer said in June that people who never want to see help for working people and poor people come up with myths.
Schumer said that this isn't a problem for wealthy people.
The story is evolving. You can check back for the latest news.
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