WASHINGTON: President Joe Biden said Wednesday that the US government will forgive $10,000 in student loans to millions of debt-laden former college students, keeping a promise he made during his 2020 White House campaign.
The move could bolster support for his fellow Democrats in November’s congressional election, but some economists believe it could cause inflation, and some Republicans in the US Congress question whether the president had the legal authority to write off the debt.
Debt forgiveness would free up hundreds of billions of dollars in new consumer spending that could be used to buy homes and other big spending, according to economists, who said it would add another wrinkle to the country’s fight against inflation.
The actions are “for the families who need them most – the working and middle classes have been hit particularly hard during the pandemic,” Biden said during a White House speech. He promised that no high-income households would benefit, responding to the plan’s main criticism.
“I will never apologize for helping working Americans and the middle class, especially those people who voted for $2 trillion in tax cuts that benefited mostly the wealthiest Americans and the biggest corporations,” Biden said, referring to the cut. taxes by Republicans, passed in line with former President Donald Trump.
Borrower balances have been frozen since the start of the COVID-19 outbreak, and as of March 2020, most federal student loans have no payments due. Many Democrats have pushed for Biden to forgive up to $50,000 per borrower.
Republicans have mostly opposed student loan write-offs, calling it unfair as it will disproportionately help people with higher incomes.
“President Biden’s student loan socialism is a slap in the face for every family that donated to save up for college, every graduate who paid off their debt, and every American who chose a particular career path or volunteered to serve in our military to avoid running into debt. Senate Minority Leader Mitch McConnell said Wednesday.
The administration has yet to set a price for the package, which will depend on how many people apply for it, White House domestic policy adviser Susan Rice told reporters. According to her, student loans received after June 30 of this year are not subject to issuance.
White House press secretary Karine Jean-Pierre told reporters that the administration has the legal authority to forgive debt under a law allowing such actions during a national emergency such as a pandemic. Earlier, US Republican Party spokeswoman Elise Stefanik called the plan “reckless and illegal.”