Daily Archives: 2022-08-24

Biden forgives $10,000 in student debt for most borrowers

Source: The Week: Most Recent Home Page Posts

Article note: I'm not a _huge_ fan of the one-time cancellation (mostly "without some kind of policy changes to do something to reign in ever-escalating education costs and/or shift education costs back onto the state without first passing through individuals" but also somewhat 'because it disproportionately benefits an already financially better off population"), but it's a thing they can do to immediately un-jam a huge swath of people and their spending power, and cutting income-driven repayment to 5% of discretionary (and raising the bar for what is considered discretionary) is excellent in all ways.

President Biden on Wednesday announced his plan to forgive $10,000 in federal student loan debt for borrowers making under $125,000 a year, "honoring" one of his campaign promises and handing a win (albeit smaller than desired) to the progressive wing of his party.

"When this happens," Biden said Wednesday, "the whole economy is better off."

Pell Grant recipients who make less than $125,000 will be eligible for up to $20,000 in forgiveness. Broad-level debt cancellation will apply to students with "federal loans from undergraduate and graduate programs, as well as Parent Plus loans," The Wall Street Journal writes.

The president also extended the current student loan repayment moratorium, scheduled to expire on at the end of this month, until Dec. 31; borrowers should expect payments to resume in January 2023, the White House said

Additionally, the administration cut from 10 percent to 5 percent the amount that borrowers enrolled in an income-driven repayment plan must pay from their discretionary income each month.

Progressive Democrats have long urged President Biden to cancel up to $50,000 in student debt per borrower. But Republicans and other critics, meanwhile, fear widespread forgiveness will contribute to rampant inflation, and find it unfair to those who have already paid off their loans or didn't go to college. Superficially, writes The New York Times, "the move could cost taxpayers about $300 billion or more in money they effectively lent out that will never be repaid."

Again, I can see reasons to oppose this move, although you want to compare it not with what we should do ideally but with *what Biden can actually do*. But spare us the inflation scare talk 5/

— Paul Krugman (@paulkrugman) August 24, 2022

Borrowers can expect more details on how to apply for the debt relief program in the coming weeks, a senior administration official told CNN.

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