Biden announces student loan debt relief program [Video]

• President Joe Biden announced relief programs that aim to free Americans from the burden of student loan debt.
• The president also extended the pause on student loan repayments until the end of the year.
• Biden insisted that previous deficit reduction efforts can cover the debt cancellation cost “many times over.”

President Joe Biden has announced a relief package for millions of Americans saddled with student loan debt, reducing the pressure mounted by Democrats in the months leading up to the midterm elections.

Individuals earning less than $125,000 a year, or couples earning less than $250,000 a year, will be eligible for up to $10,000 in loan forgiveness. Students with the greatest financial need will be eligible for Pell Grants, which provide an additional $10,000 in relief.

If a person or couple’s income in either 2020 or 2021 was below the cap, they will be eligible. Current students will be eligible, but future students will not be. Payments of undergraduate loans will also be capped at 5% of monthly income.

The pause on student loan repayments was also extended for the last time until the end of the year. The pause started during the pandemic under the Trump administration and was extended by Biden four times since he took office. The Financial Health Network reported in April that this pause saved over $1.5 billion each month for federal student loan borrowers.

Biden stressed the importance of freeing Americans from the heavy burden that hinders them from pursuing a college degree or having “access to the middle-class life that the college degree once provided.”

Biden estimated about 43 million beneficiaries, 90% of whom come from households making less than $75,000 per year, and about 60% are eligible for the Pell Grants that give a total of $20,000 in cancellation. He estimates that this will fully cancel debt for about 20 million people.

According to the Education Department, about 8 million borrowers will have automatically forgiven debt, while others will need to apply.

The feasibility of student debt forgiveness has been discussed for months now, with pressure mounting on Biden to deliver on one of his campaign promises.

Republicans countered that the president does not have the authority, but the Education Department released a memo that legally justifies the move. General counsel Lisa Brown explained that a 2003 law known as the HEROES Act authorizes the education secretary to “waive or modify statutory and regulatory provisions” during national emergency situations such as the pandemic, to allow for “categorical debt cancellation directed at addressing the financial harms caused.”

An analysis of the Penn Wharton Budget Model revealed that the $10,000 relief program would cost nearly $300 billion in the first year, with more than two-thirds of the relief benefiting America’s top 60% of earners.

Biden insisted that previous deficit reduction efforts cover the cost “many times over.” He added that he will “never apologize for helping Americans, working Americans, and the middle class.”

Critics argued, however, that debt cancellation will not benefit low-income citizens who are struggling financially or have never attended college. They also pointed to the increasing cost of college amid record-high inflation.

Senior administration officials responded that debt cancellation’s impact on inflation would still be “largely offset” by the resumption of student loan payments next year.

Source: CBS News