President Joe Biden is expected to announce Wednesday that the federal government will excuse up to $10,000 in student loan debt for most Americans and extend a delay on loan payments until January.
According to the Associated Press:
The precise details of Biden’s plan, which will include an income cap limiting the forgiveness to only those earning less than $125,000 a year, were being kept to an unusually small circle within the Biden administration and were still not finalized on the eve of the announcement.
Down-to-the-wire decision-making has been a hallmark of the Biden White House, but the particular delay on student loans reflects the vexing challenge confronting him in fulfilling a key campaign promise.
The plan would likely eliminate student debt entirely for millions of Americans and wipe away at least half for millions more.
Americans currently owe an estimated $1.75 trillion in student loan debt, according to Student Loan Hero. That debt is spread among approximately 48 million borrowers.
30% of all American adults — 4 in 10 of the people who attended college — report that they have accumulated some level of debt to obtain their education, according to the Federal Reserve.
Biden’s plan is certain to draw criticism from conservatives, who claim such a plan will be too expensive, but as The Guardian noted in June, that’s simply not accurate:
But if Joe Biden signed an executive order tomorrow, the government won’t pay out a dime and those costs certainly don’t have to be shouldered by everyday taxpayers at the expense of programs like Medicare or social security.
That’s because federal student loan debt is already included in the national debt. Let me explain.
The Department of Education (DoE) does not lend money to students directly. It borrows money from the US Treasury (the federal department that prints money) and then lends that money to students.
As the Urban Institute points out, federal student loan debt is already accounted for in the national debt. This additional debt is added when the Treasury lends money to the DoE. Put another way, it was the creation of student loans that has added over a trillion dollars to the national debt.
In fact, canceling student loan debt is actually a form of tax cut that’s likely to lead to economic growth. Quite simply, if those who owe student loans have more money, they’re likely to spend it on goods and services that will keep the U.S. economy out of recession.
Joe Biden just scored another major victory. What have Republicans done for the American people lately?
