US President Joe Biden’s latest plan to cancel $10,000 in student debt per borrower.
The president was set the unveil the plan last weekend though the Texas school shooting has postponed any announcement.
The Washington Post published an article on May 27 detailing the Biden administration’s plan regarding student debt. According to three people familiar with the situation, there will be an upcoming announcement that the president will forgive $10,000 in debt for graduates earning under a certain limit.
The timing of the announcement has changed. Originally, the plan was to be unveiled last weekend but developments concerning the school shooting in Texas have meant that the plan has been postponed. So far, no one in the administration has admitted the forgiveness plan exists.
What is included in the debt relief plan?
It is expected that a threshold for the $10,000 relief would be limited to people earning less than $150,000 a year, so 97 percent of graduates would qualify for the plan. This would put the cost of the forgiveness at $230 billion.
It is not yet known whether payments will resume from the end of August, when the current pause will lapse. If payments and interest accruation were to resume then a wiping off of $10,000 of debt may be matched by the interest on the loans, making the plan seem more like a stop gap idea compared to how large the student debt problem is in the US/
Progressive Democrats have come out against the $10,000 plan. New York Representative Alexandra Ocasio-Cortez said, “$10k means tested forgiveness is just enough to anger the people against it *and* the people who need forgiveness the most.”
“$10k relieves most the people who owe the least. What relief is there for the most desperate? For them, interest will undo that 10k fast. We can do better.”
What did Biden promise during the 2020 election?
During the presidential campaign, Joe Biden had promised to forgive all student debt. For some context and scale, the average student loan debt per borrower is $39,351, which means an average monthly payment of $393, according to recent statistics from EducationData.org. In total 43.2 million people currently have a student loan and that number is only increasing each year.
Worryingly, around 2.6 million graduates owe more than $100,000 in student loan debt alone.
“With the flick of a pen, President Biden could cancel $50,000 in student loan debt and provide millions upon millions of student loan borrowers a new lease on life,” Senate Majority Leader Schumer said in October. But with this watered down plan this looks increasingly unlikely.
How this will fly with voters in the upcoming elections is unknown. The Democrats are thought to be on the defensive after months of little to no serious legislation being passed.