Washington: In keeping with a promise he made during his bid for the presidency in 2020, President Joe Biden announced on Wednesday that the federal government would waive $10,000 in student loans for millions of former college students who are currently drowning in debt.
However, several economists warned that it might drive inflation, and some Republicans in the US Congress questioned whether the president had the legal power to erase the debt. The action could increase support for his fellow Democrats in the November midterm elections.
According to experts, debt forgiveness could release hundreds of billions of dollars for fresh consumer spending that may be used for home purchases and other large-ticket items, adding a new wrinkle to the country’s fight against inflation.
According to Biden during remarks at the White House, the initiatives are “for families that need them the most – working and middle-class Americans hit most hard during the pandemic.” In response to a key critique of the plan, he promised that no high-income households would benefit.
Referring to a $2 trillion tax cut approved by Republicans under former President Donald Trump, Biden said, “I will never apologise for helping working Americans and the middle class, especially not to the same folks who voted for a $2 trillion tax cut that mainly benefited the wealthiest Americans and the biggest corporations.”
Since the start of the COVID-19 pandemic, borrower balances have been frozen, and most federal student loans have required no payments since March 2020. Biden was under pressure from several Democrats to forgive up to $50,000 per borrower.
Republicans mostly opposed student loan forgiveness, calling it unfair because it will disproportionately help people earning higher incomes.
“President Biden’s student loan socialism is a slap in the face to every family who sacrificed to save for college, every graduate who paid their debt, and every American who chose a certain career path or volunteered to serve in our Armed Forces to avoid taking on debt,” Senate Minority Leader Mitch McConnell said Wednesday.
The administration has yet to determine the price tag for the package, which will depend on how many people apply for it, White House domestic policy adviser Susan Rice told reporters. She said that student loans obtained after June 30 this year are not eligible. – Agencies
