In a speech delivered from Washington DC on Wednesday, August 24th, president Bident announced his long-awaited plan to lessen the burden of student loans. The plan is primarily aimed to help lower-income graduates and came together with another extension of the payment hiatus—the 7th one since the covid-19 pandemic began in 2020.
What Does Biden’s Plan Entail?
- The Biden Administration plan entails the forgiveness of $10,000 for borrowers who earn less than $125,000.
- The plan also involves forgiving $20,000 for Pell grant recipients who earn less than $250,000.
- The President also announced another freeze on loan payments. The current one expires on August 31st, and the new one will last until December 31st.
- The Administration argues that the plan will mostly help low-income people, with 90% going to those earning less than $75,000
- The plan is in line with Biden’s campaign promises. Progressives consider the $20,000 for Pell grant recipients a major win.
- The plan will benefit up to 43 million people and another 20 million could have their debt completely cancelled.
- Throughout the year, the Biden administration approved the forgiveness of around $32 billion in student loans.
- The total US student debt has become greater than $1.7 trillion in 2022.
- The President announced that the plan is possible due to significant deficit reductions achieved last year, and additional deficit reductions expected in the current fiscal year.
- Under the new student loan program, no one is to pay more than 5% of their income per month.
- The Biden Administration also announced the plan to reform the public service forgiveness program and to put colleges under more scrutiny when trying to increase tuition.
- The Department of Education will announce the guidelines on how to apply for the loan forgiveness program within a few weeks.
- According to a recent study, student loan forgiveness might cost up to $980 billion over the next 10 years.
- While Biden’s announcement has been much anticipated and has many supporters, some fear it might exacerbate inflation and lead to higher tuition fees.
- The plan is expected to boost the support for the Democratic Party in the upcoming midterm elections.
This article originally appeared on The Tokenist
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