Why it’s hard for Biden to decide how much student debt to forgive
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Joe Biden is seen at the Indo-Pacific Economic Framework for Prosperity launch party in Tokyo, May 23rd 2022.
Reuters| Reuters
Cancellation of $10,000: The Risks
Biden, on the campaign train, stated that he supports clearing $10,000 for everybody. This would require a cost of around $2,500 $321 billionAbout one third of student loan borrowers can be forgiven completely.
There is concern, however that $10,000 of relief might cause frustration and more disappointment than other announcements. After all, the average student education debt is around $30,000. There are more than 3 million borrowers who owe greater than $100,000.
The Senate’s top Democrat Chuck Schumer, D-NY, is pushing President Trump to cancel $50,000 at minimum.
NAACP also argued that $10,000 would not be enough to help Black students who are borrowers of student loans. Wisdom Cole, the NAACP’s national director, was recently appointed to lead its youth and college division. said on Twitter that nixing just $10,000 would be “a slap in the face.”
… and $50,000
But, cancelling $50,000 can have its risks. This level of relief comes at a cost of over $900 billion. It would mean that 80% student loan borrowers would no longer be liable for any debts.
Mark Kantrowitz, an expert in higher education said that a greater amount of money is more likely be subject to political attacks and legal problems.
Also, there are concerns over a potential backlash.
Mark Kantrowitz
higher education expert
“The biggest criticism of forgiving $50,000 is that it provides forgiveness for borrowers who are capable of repaying their own student loans,” said Kantrowitz, adding that it’s often those with multiple degrees with owe the most.
He said that Republicans who are overwhelmingly against student loan forgiveness would be less inclined to contest a lesser amount simply because it would come at a lower cost.
There are always problems
The president may have to forgo Congress in order to get forgiveness, something he seems to be thinking about doing.
Kantrowitz stated that challengers could come forward “to defend the principle of only the legislative branch being able to appropriate funds.”
However, not all borrowers would be happy with any amount of forgiveness.
Even if the $50,000 debt was taken out, the three million plus borrowers in arrears who are greater than $100,000 in deficiency would remain with substantial balances.
Kantrowitz added that “there are also concerns over a backlash coming from borrowers, people who have not yet paid off their loan and people who don’t borrow as they did not go to college.
However, the past shows us that actions on student loans can make or break an election.
Kantrowitz stated that the Democrats had pledged in 2006 to lower student loan interest rates. This helped them win control of the Senate and the House.
As the midterm elections draw near, this is likely to be an important consideration for the White House.
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