President Joe Biden additionally announced a plan to cancel student loan debt, one of his major pledges ahead of the November presidential election. President Biden announced a new student loan forgiveness plan in a speech on the 8th in Madison, Wisconsin, a battleground state for the presidential election, on the topic of ‘lowering the cost of living for Americans.’
According to this, those earning less than $120,000 per year ($240,000 or less for married couples combined) will have up to $20,000 of interest accumulated due to failure to repay loans on time be forgiven. In addition, through various other measures, the debt of more than 4 million people will be completely written off, and the debt of 10 million people will be reduced by at least $5,000. In addition, a plan to cancel the debt of borrowers who have repaid loans for more than 20 years (more than 25 years for graduate school) was also included in the plan announced by President Biden on this day.
The decision was made to ease the burden of student loans even in cases where a university suddenly closes, a student loses eligibility to participate in the federal student loan program, or a student is unable to repay student loans due to high other costs such as medical expenses and childcare.\
In addition, loans can be forgiven according to the already announced policy, but debts of borrowers who do not apply for this are automatically forgiven. It is estimated that the number of beneficiaries from this forgiveness plan will reach at least 23 million. Additionally, the White House explained that if beneficiaries of the forgiveness plan previously announced by the Biden administration are included, the debt burden of a total of more than 30 million borrowers can be reduced.
In his speech, President Biden diagnosed, “Too many Americans today, especially young people, are saddled with unsustainable debt in exchange for a college degree, and paying off student loans has become too burdensome for working- and middle-class people.” President Biden then pointed out that the burden of student loan repayment ultimately hinders the economy by acting as a burden on marriage, childbirth, home purchase, and starting a business.
At the same time, President Biden emphasized, “We will not stop cancelling student loan debt for hard-working Americans,” and added, “That is good for our economy.” President Biden’s student loan forgiveness is evaluated as considering the votes of young voters, such as those in their 20s and 30s who have just graduated from college and still have a lot of loans, and people of colour.
President Biden won the 2020 presidential election over former President Donald Trump based on the full support of young people and people of colour, but public opinion has shown that their support for Biden has decreased significantly compared to four years ago ahead of the rematch with Trump in November. It has been shown in the survey.
The White House said it expects this policy to greatly help blacks and Latinos, saying they tend to take out more loans and fail to repay their loans than white people. The New York Times assessed that if President Biden succeeds in implementing the new plan before the November presidential election, it could help win the support of voters who were greatly disappointed by the failure of President Biden’s first attempt to cancel student loan debt.
In August 2022, President Biden announced a policy to waive up to $20,000 of student loan debt for households with an annual income of less than $125,000 ($250,000 for married couples). However, in June of last year, the Supreme Court ruled that the president did not have the legal authority to do so, and about 4 million people received benefits until the policy was suspended. Since then, President Biden has been seeking ways to eliminate student loan debt to the extent legally permitted.
The NYT reported that only part of the new plan is expected to be implemented before the presidential election, and that the Republican Party, which has opposed student loan forgiveness, may file another lawsuit.