President Joe Biden's plan to forgive between $10,000 and $20,000 in student debt for millions of Americans is entirely paid for, according to White House officials. However, this just adds to the nation's debt and raises concerns that the whole cost of the policy will just be added to it.
The White House now claims that deficit reduction that is already taking place has completely compensated for the gift.
Biden's $10,000 Student Loan Forgiveness Will Increase Federal Deficit
According to economists, the White House's remarks and refusal to provide specific offsets for the student debt transfer, such as tax increases or budget cuts, indicate that the administration simply intends to add the money to the $726 billion federal deficit.
Because Congress decided not to approve trillions in emergency coronavirus spending as it did at the onset of the pandemicin 2020, the deficit has decreased under Biden. According to economists, the government is claiming that the declining deficit offers it more money to spend on initiatives like the student loan distribution. However, this implies that it won't be used to reduce debt, leaving the bill to be paid by later taxpayers.
Last week, Prsident Joe Biden made plans to cancel $10,000 in student loans for those with annual incomes under $125,000. As long as their salary falls below the $125,000 cutoff, Pell Grant applicants will receive a $20,000 debt giveaway. No home or individual in the top 5% of earners, according to administration officials, will profit from the decision.
Additionally, the White House has decided to postpone student loan payments until the end of the year. A new Education Department proposal that permits borrowers to cap undergraduate loan payback at 5% of their monthly income coincides with the announcement, raising the cost of the handout to taxpayers, according to Fox News.
The Committee for a Responsible Federal Budget estimates that President Biden's federal student loan forgiveness program will cost American taxpayers between $440 billion and $600 billion over the following ten years.
A report released on Thursday, the Committee for a Responsible Federal Budget decided on a core estimate of about $500 billion. Federal student loans totaling more than $1.6 trillion are owed by more than 43 million Americans, more than half of those owing less than $20,000 and close to a third owe less than $10,000.
President Joe Biden's plans, according to critics, will exacerbate the US's record-high inflation rates. The initiative, as according to Senate Minority Leader Mitch McConnell, "yet another way to make inflation even worse, reward far-left activists, and achieve nothing for millions of struggling American families who can barely tread water," as per Fox Business.
Americans Doubtful of Biden's Student Loan Cancellation Plan
In accordance with recent poll, opinions on President Joe Biden's proposal to forgive up to $20,000 in federal student loan debt for some borrowers are almost evenly divided. The administration, however, should seek to reduce the price of higher education.
According to a Politico/Morning Consult poll, 43% are against Biden waiving between $10,000 and $20,000 in federal student debt per borrower, while 48% are in favor of it. Democrats support the debt bailout proposal 72% to 26%, a number that is almost as high as the 73% of Americans who owe loan debt.
The plan is opposed by only 19% of Democrats, compared to 67% of Republicans and 47% of independents. Republicans have criticized the bailout proposal for easing the debt of the nation's richest graduates and placing the burden on American taxpayers in the blue-collar sector.
The poll also revealed that a sizable majority (77%) believe the Biden administration should concentrate on lowering the cost of higher education; 86% of Democrats, 75% of independents, and 68% of Republicans shared this opinion.
Another part of the plan that extends the moratorium on loan payments until December 31 is supported by 56% of Americans. 77% of Democrats, 51% of independents, 37% of Republicans, and 82% of those who are still paying their bills approve it, New York Post reported.
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