Biden announces student loan forgiveness for low-income Americans

US President Joe Biden announced this Wednesday (24) that most University education in the United States that maintain student debts will have relief of $10,000.

“Fulfilling my campaign promise, my administration is announcing a plan to provide relief to working and middle-class families as they prepare to resume federal student loan payments in January 2023,” Biden tweeted.

The $10,000 discount, announced three months before the traditionally difficult midterm elections for the ruling Democratic Party, only applies to those earning less than $125,000 a year.

For those who attended the university with government assistance through Pell Scholarships, the relief will be $20,000.

According to a study by the University of Pennsylvania, the $10,000 relief alone would cost the state about $300 billion.

The spending is necessary not only for reasons of social justice, but also for “the United States to win the economic competition of the 21st century” thanks to education, the 79-year-old president justified in a later speech.

According to Biden, the discount will be financed with the deficit reduction achieved during his term.

JOE MIDDLE CLASS

The Democratic president, nicknamed “Middle Class Joe”, once again presents himself as a defender of this socioeconomic group, in opposition to the tax reduction for companies, decreed by his predecessor, Republican Donald Trump.

The discussion about student debt was indeed intense, as it happens every time it is proposed to transfer private spending to the public sphere in health and education in the United States.

But the decision, which took more than a year of work from the White House, was welcomed by Democrats.

Senators Chuck Schumer and Elizabeth Warren called in a note “a giant step towards resolving the student debt crisis.”

For Senate Republican leader Mitch McConnell, it was a “deeply unfair” reform and “a slap in the face to all families who made sacrifices to save for (pay) college” and managed to pay off the debt in full.

The decision also divides experts.

Some consider the financial move to be risky at a time when the United States is facing soaring prices.

Such was the case of Jason Furman, former economic adviser to former President Barack Obama, who warned on Twitter that it is “reckless to throw 500 billion dollars worth of gasoline into the fires of inflation”.

On the other hand, the chief economist at Moody’s, Mark Zandi, assessed that the impact of the measure on growth and inflation would be “marginal”.

HISTORICAL PROBLEM IN THE USA

The student debt problem has lasted for decades in the United States.

Universities can often cost between $10,000 and $70,000 a year, leaving graduates with overwhelming debt when they enter the workforce.

According to government estimates, the average debt of American students when they graduate is $25,000, an amount that many take years or even decades to pay off.

In total, about 45 million college students nationwide owe $1.6 trillion, according to the White House.

The promise to pay off student debt “is the reason a lot of people my age and my generation voted for him (Joe Biden), because it’s something that affects us heavily,” said Amarie Betancourt, 20, a student at Howard University. from Washington.

“It’s already a blessing that part (of the debt) is written off,” added Vivian Santo-Smith, a political science student at the same private university, historically linked to the African-American community.

Biden stressed, however, that the moratorium on repayment of student loans introduced during the pandemic will end at the end of the year, and that it will be necessary to start paying the debt after deducting the partial forgiveness decreed on Wednesday.

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