US President Joe Biden announced on Wednesday a new round of federal student loan forgiveness to address the $9 billion in unsustainable debt that borrowers accumulate to complete their college education.
According to a White House statement, Biden is announcing additional student debt relief for an additional 125,000 Americans, bringing the total debt cancellation for nearly 3.6 million Americans to $127 billion.
The announcement came amid borrowers preparing to resume payments after a three-year pause that began during the Covid-19 pandemic. Biden is trying to fulfil his campaign promises on debt relief to boost his chances in the presidential election.
We’re not done yet.
The president promised to help ease the burden of student debt, although his original plan was overturned by the conservative majority on the Supreme Court. He relied on various programmes, such as last year’s SAVE Plan, which was supposed to reduce repayments by tying them to borrowers’ income.
“While a college degree is still the ticket toward a better life, that ticket has become excessively expensive. Americans who are saddled with unsustainable debt in exchange for a college degree has become the norm.”
Biden also supported existing programmes, such as loan forgiveness for public service. Education Secretary Miguel Cardona stated:
For years, millions of eligible borrowers were unable to access the student debt relief they qualified for, but that’s all changed thanks to President Biden and this administration’s relentless efforts to fix the broken student loan system.
Analysts at BNP Paribas estimated that such a move could take $100 billion out of consumers’ pockets and slow overall growth in the last three months of this year. However, the additional debt forgiveness, designed to cushion the impact of a long-planned resumption of loan repayments this month, cannot damage the economy in the long term.
Republicans did not back Biden’s plans for student debt, but they were busy voting to oust Republican Kevin McCarthy as Speaker of the House.
In addition, the National Association for the Advancement of Colored People (NAACP) is pushing Biden to expand debt forgiveness by combining Parent PLUS loans, which parents use for their children’s college education, with eligibility for the SAVE Plan.
NAACP President Derrick Johnson highlighted the disproportionate impact of debt on the well-being of Black families.
“Historically, education has been viewed as an entry point for marginalised communities to achieve upward mobility and begin building generational wealth. It is unconscionable that, in their quest to provide their children with a brighter future, Black parents have fallen victim to a system that preys on their inherent disadvantage.”
