Cancel Student Debt Protester

As US student loans approach a total of 1.75 trillion dollars, President Biden aims to enact a student loan forgiveness program to boost our economy. It includes up to $20,000 for millions of Americans and proposes a new repayment plan based on income. Graduates earning less than $125,000 per year (250,000 per year per household) can qualify for up to $10,000 in debt forgiveness. This plan includes forgiveness for direct subsidized loans, unsubsidized loans, and graduate or parent PLUS loans, however, private student loans are ineligible. Students who receive a Pell Grant can qualify for up to $20,000 in debt cancellation. About 8 million borrowers were automatically forgiven by the data from the Department of Education, but many people will have to apply online for debt forgiveness in early October. With all this being said, the federal student loan pause period has been extended ending on January 1, 2023.

Biden’s plan shows that 87% of the money in forgiven loans would reach those earning less than $75,000 a year. This statistic shows that student loan forgiveness primarily benefits lower and lower-middle-class individuals or “families who need it the most.” Because of the income cap for qualification, wealthy families are not eligible for forgiveness. Estimates show that households with less than $82,000 would receive most of the student loan forgiveness money. However, the middle class would see the largest income increase.

While people will see great benefits financially, the student loan forgiveness program may cause increasing inflation. Some analysts argue that the impact on inflation will be negligible, while others predict that it will be detrimental to our economy, and cause prices everywhere to rise.


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