President Biden has announced a loan forgiveness plan that would relieve up to $20,000 in student loan debt for eligible borrowers | Photo by Giorgio Trovato on Unsplash
President Biden has announced a loan forgiveness plan that would relieve up to $20,000 in student loan debt for eligible borrowers | Photo by Giorgio Trovato on Unsplash
President Joe Biden recently announced that he will cancel thousands of dollars of student loan debt from eligible borrowers, and while the President has gained some praise from borrowers and Democrats, there has been criticism as, well as the decision comes when inflation is soaring.
According to a report by the Wall Street Journal’s editorial board, Biden will cancel $10,000 in debt from borrowers who make $125,000 or less per year. Fox News reported that borrowers who attended college on Pell Grants have forgiveness that extends up to $20,000. President Biden has also extended pandemic-era payment freezes through the end of the year.
“Wasn’t it only last week that Democrats were touting something called the Inflation Reduction Act? So much for that,” the Wall Street Journal editorial board wrote, and added, “This is an inflation expansion act.”
The Wall Street Journal report referred to the Penn Wharton Budget Model, which said this would cost $300 billion this year and $330 billion over 10 years. It adds that this is much larger than the $102 billion that the Inflation Reduction Act was said to reduce over 10 years beginning in 2027.
The nation’s student debt is currently more than $1.6 trillion and the Wall Street Journal piece went on to say that 70 % of the loan relief is going to those in the top 60% of income distribution. According to the Education Data Initiative, $64.5 billion in student loan debt is with Pennsylvania residents. Of these borrowers, 14.9% owe less than $5,000, and 24% owe an average of $28,284. According to the Education Data Initiative, among all 50 states, the federal student loan debt averages $29 billion per state.
More than 43 million Americans have federal student loan debt, according to a Fox News report. The latest federal data shows that nearly one-third owe less than $10,000 and more than half owe less than $20,000.
While inflation is of major concern, another aspect is that the Treasury Department reports that the current national debt is more than $30.7 trillion.
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