Joe Biden Set to Pass Student Loan Forgiveness Plan

By Andreas Fanos on August 30, 2022

There has been a long debate about whether college should be free for students. Some view it as something that should simply not be free because it is not 100% essential, while some see the rising costs of college being a deterrent to not going and adding massive amounts of debt, therefore believing it should be free of charge.

US President Joe Biden has made an official plan and kept his word on one of his big campaign promises to help ease the financial burden of college students. Outlined in his plan is the proposal to cancel $10,000 for those making under $125,000 a year and an additional $10,000 for those who received the Pell Grant while in school. This means some will qualify for a reduction of $20,000 in student loan debt. Biden’s plan will also include extending the pause on student loan payments through December 31 of this year as the current hold is set to expire by August 31. There will also be a newly implemented income-driven plan.

President Joe Biden has been criticized in the past for extending the pause on student loans last time just days before it was up. However, this announcement shows he has stuck to his word to help ease the burden on middle-class families by eliminating some student loan debt. According to an article by NBC News, many will benefit from this plan. The White House lists as many as 43 million will benefit and about 20 million will have their full remaining balance cleared.

Photo credit – Pexels

Some Republicans have criticized the plan because they believe it will add more inflation to the current state of the economy. Although, others can argue the cancellation or reduction of student loan debt will allow more money to flow into the economy as more people spend with less debt or no more student loan payments. The plan will certainly allow young adults to live on their own and purchase homes or just spend outside on the economy in general. Joe Biden does not agree that this will cause more inflation but we will have to see. Some will simply not like the decision because others have paid their student loans in full many years ago or recently. According to the NBC article, about 45 million people in the United States have some form of student loan debt for a total of $1.7 trillion.

This decision by Joe Biden certainly is groundbreaking in itself. Many will get some form of relief or have their balances wiped clear. The question is: will this have any detrimental effects on the economy? And, is it right to do this when so many others already paid off their debt years ago?

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