Among the most ambitious scheme that the President of the United States Joe Biden has kept insisting on for over a few years now is finally set to be grounded amid lots of criticism coming in from political rivals and economists questioning the timing of the debt redressal at a point when America stands on the tip of the decade’s economic catastrophe, while some other watch it as a smart move ahead of the mid-term elections.
Joe Biden’s administration project aims to provide a $10,000 debt relief to the earners making less than $125,000. President Biden’s loan forgiveness scheme is likely to cost the American taxpayers a whopping $300 billion, besides providing the beneficiaries a pause of one year for the repayment of dues.
As per the latest federal data, the student debt in the United States now is over $1.6 trillion. More than 43 million Americans have federal student debt on them, with almost one-third owning less than $10,000 and over half with a debt load of less than $20,000.
A detailed explanation of who and how one will get benefitted out of the debt forgiveness scheme:
According to the Education Department, at least 40,000 student loan borrowers will receive immediate, automatic student loan forgiveness. And another 3.6 million borrowers will accelerate their progress towards getting their student loans completely wiped out.
The student loan forgiveness plan could reduce debt for more than 43 million Americans and could fully eliminate student loan debt for millions of those borrowers.
Borrowers with a family income of less than $125,000 having borrowed a loan from the federal body and not the private ones stand eligible for forgiveness under the scheme.
Criticism around the scheme:
The income cap for eligibility – designed to prevent wealthy Americans from benefiting – is another area of contention for progressive activists, who say it would create a bureaucratic mess and prevent millions of borrowers from getting relief.
Canceling potentially up to $10,000 in student loan debt would mean billions more collectively staying in the pockets of Americans. Some critics argue the extra money for consumers to spend risks stoking demand and further accelerating historic inflation.
Indian-American woman swept away by floods found dead
A separate study this week coming in from The Wharton School of the University of Pennsylvania found that forgiving $10,000 in federal college student loan debt will cost the federal government between $300 billion and $980 billion over the project window of 10 years.
Targeting what repercussions the move might cause to the prevalent scenario of inflation in the US former treasury secretary in the Obama administration said, “Student loan debt relief is spending that raises demand and increases inflation.
It consumes resources that could be better used to help those who did not, for whatever reason, have the chance to attend college. It will also tend to be inflationary by raising tuitions.”
President Biden is likely to announce the roll-out of its scheme today the plan of which will be finalized as coming from the official source only by November and will be in effect not ahead of July 1st the next year.
One of the most visionary programs of the democrats which was on the trail and the hit point during the 2020 election of the POTUS was once expected to provide relief amounting to $50,000.