Biden forgives millions of student loans; critics fear inflation – Reuters

President Joe Biden said on Wednesday the U.S. government would forgive student loans for millions of debt-saddled former college students, keeping a pledge he made in the 2020 campaign for the White House.

Biden announced Wednesday that he would cancel $10,000 of federal student loan debt for certain borrowers making less than $125,000 per year, and up to $20,000 for Pell Grant recipients.

Biden said the plan would help working and middle class people hit hard by the pandemic. He claimed the resumption of debt will provide real benefits for families without meaningful effect on inflation.

Many Democrats wanted Biden to forgive more than $50,000 in student loans, but Republicans called it unfair and said it would disproportionately help people earning higher incomes.

The administration has yet to determine the price tag for the package, which will depend on how many people apply. Student loans obtained after June 30 this year are not eligible.

The administration is forgiving $10,000 in student debt for low-income borrowers and up to $20,000 for students who received federal Pell Grants, the White House said.

A senior Biden administration official said the plan could benefit 43 million student borrowers, and that payment resumptions could even dampen prices.

However, there are many opponents to this announcement. For instance, former Treasury secretary Larry Summers said debt relief would be inflationary and waste resources.

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