Many Americans have been asking the government for years to forgive student loan debt, but why is it happening now?
A campaign promise becomes reality.
“When I campaigned for president, I pledged to provide student debt relief. And I honor that pledge today,” President Joe Biden said.
It’s for now. Millions of Americans are waiting for the next steps to forgive at least $10,000 in student loan debt and up to $20,000 for those who qualify. Yet leaders in nearly half the country, all Republicans, want President Joe Biden to backtrack on his pardon promise. They argue that only a few will see the benefits, and even more will feel the burden.
“It’s unfair to people who have gone down other paths in life that didn’t require them to take a lot of loans. They made those decisions to not have that debt and now the debt is being put on them,” he said. said Florida Governor Ron DeSantis. .
So why cancel student debt now?
“The intent of the loan forgiveness program is to truly support members of the middle class and help those who were experiencing financial hardship get back on their feet after the pandemic,” said Miguel Cardona, U.S. Secretary of State. Education.
The forgiveness comes at a time when inflation is near record highs, with soaring gasoline prices, rising rents and housing costs, fueling economic uncertainty.
But the idea of canceling student loan debt dates back to 2008. The Great Recession prompted adults to go back to school and learn new skills.
Simultaneously, the federal government made major cuts to funding for higher education, forcing dozens of companies out of the private student loan market. This eventually prompted colleges and universities to raise tuition fees to compensate for lost revenue.
Fast forward to 2022, where the average cost of tuition and fees at public colleges has increased by more than 179% over the past 20 years. And millions of Americans have turned to loans to offset tuition.
“To the argument that some people are saying, well, I didn’t go to college or I paid off my debt, we’re trying to keep them from defaulting. If people are defaulting, it’s going to hurt local economy, it’s going to hurt everybody,” Cardona said.
But some economists like Ken Troske of the University of Kentucky argue that President Biden’s plan only helps a small fraction of Americans relative to the overall economy and warns that the move could further exacerbate inflation.
“For a lot of people, their debt has been alleviated, but will they immediately go out and spend a lot more money? Probably not. If they do, it’s going to stretch out over a long period of time, so it’s hard to say. ‘imagine that will have a huge impact on inflation anytime soon,’ Troske said.
As legal threats mount from Republicans on the President’s student aid package, borrowers wonder when and if they will see some of that relief, as more and more Americans wonder who will foot the bill for the forgiven billions of dollars.