On Wednesday, President Joe Biden announced that he would cancel $10,000 in federal student loan debts for many borrowers. Fulfilling another campaign pledge, Biden has brought financial relief to ten of millions of student loan borrowers in America. His Wednesday tweet also included forgiving $20,000 for those who had received Pell Grants.
The Educational Department said that the relief would be limited to Americans who earned under $125,000 per year, or married couples or heads of households who earn under $250,000. There is also a cap of the relief at the amount of the outstanding debt of the borrower. There will also be an extension of the payment pause on several student loans for the last time through December 31, 2022.
There have been years of advocacy pressure as well as heated debates among the administration officials about forgiving education loans and the White House under Biden has finally wiped out hundreds of billions of dollars in consumer debt.
Advocates have said that canceling part of students’ loans might motivate the young voter to come out and vote. The president had been losing popularity and forgiving part of their loans might bring back some of his popularity, which was very high during the elections and has slowed down as the midterms are approaching.
Although many groups were in favor of a higher amount to be forgiven, there were concerns about the economy and hence the amount was reduced to $10,000 or $20,000 from a proposed $50,000 or higher, per American.
Education loans have increased student debts and more than 40 million Americans have loans that are reportedly about $1.7 trillion, which is much higher than debts due credit cards or automobiles. In 1980, the average student loan was $12,000 and now it is $30,000. Wages have not increased in proportion to the debts that graduate students incur.
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