At a time where inflation is raging, President Joe Biden wants to forgive student loan debt and was met with criticism more than praise.
The Department of Education’s press release included the specifics of the move, which is extending the existing pause for paying back student loan debt through the end of 2022. The forgiveness made up to $20,000 in debt cancellation for borrowers who make an annual income less than $125,000 for individuals or $250,000 for married couples who had received a Pell Grant. Those who did not receive a Pell Grant, but fell within these income standards, will be eligible for $10,000 in debt cancellation.
Borrowers with annual income during the pandemic of under $125,000 (for individuals) or under $250,000 (for married couples or heads of households) who received a Pell Grant in college will be eligible for up to $20,000 in debt cancellation. Borrowers who met those income standards but did not receive a Pell Grant will be eligible for up to $10,000 in relief.
Other parts of the forgiveness policy were to reduce debt repayments from 10% to 5% in discretionary income and delay debt repayments through the end of 2022 without incurring interest on these payments.
The Department of Education boldly declared, “The Biden-Harris Administration will keep fighting to reduce the cost of higher education by working to make community college free and doubling the maximum size of the Pell Grant,” although evidence shows it will likely do the opposite.
The Heritage Foundation claimed that Biden’s move was ill-conceived and a “fundamentally unfair and regressive move that will accelerate the rise of inflation.” Initial cost estimates for the loan forgiveness range from $440 billion to $600 billion, which adds a further burden to taxpayers.
Other concerns raised by Biden’s critics are that it is unfair for those who worked to pay off their student loan debts, it is a blatant political move to curry favor for high-earning individuals who tend to have outstanding student loan debt, and it will further inflate the costs of going to college.
