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Tags: student debt | joe biden | student loan forgiveness | 1.75 trillion

Biden's $1.75T Student Debt Conundrum

Biden
President Joe Biden (Getty Images)

By    |   Wednesday, 20 April 2022 02:52 PM EDT

For millions of Americans, the hot topics of inflation and the stock market are taking a backseat to another pressing economic issue: $1.75 trillion in student loan debt in the U.S.

The Biden admin announced Tuesday it will erase the debt of more than 40,000 borrowers, and enforce a new, one-time waiver in an overhaul of an Education Department program affecting about 3.6 million borrowers.

The moves come as the Biden administration has committed to fixing “longstanding” and “inexcusable failures” affecting student loan programs, Axios reported Tuesday.

The caveat: Biden’s student loan handouts are for low-income borrowers and government workers.

Growing Political Pressure on Biden

Prominent politicians like Rep. Alexandria Ocasio-Cortez, D-N.Y., argue relief is sorely needed, urging Biden to cancel student debt entirely. “One of the single most impactful things President Biden can do is pursue student-loan cancellation. It’s entirely within his power,” Ocasio-Cortez said to The New Yorker in February.

Sen. Bernie Sanders, I-Vt., Sen. Elizabeth Warren, D-Mass., and nearly 100 other lawmakers have urged President Biden to cancel student debt, saying in a joint letter earlier this month that “[c]anceling student debt is one of the most powerful ways to address racial and economic equity issue” in the economy.

Rep. Pramila Jayapal, D-Wash., has linked the cancellation of student debt to social justice, tweeting last Saturday: “Student debt cancellation is racial justice. Student debt cancellation is gender justice. Student debt cancellation is economic justice.”

Potentially seeking to reassure restive borrowers, White House Press Secretary Jen Psaki told the liberal Pod Save America podcast on April 14 that “canceling student debt is still on the table,” and that the Biden administration would either extend the student loan pause again, or “we’re going to make a decision about canceling student debt” altogether.

‘Keep Bullying the White House’

Sanders and groups like Debt Collective continue to passionately urge the Biden administration to cancel student debt, with Ocasio-Cortez imploring borrowers last month to “keep bullying The White House” in order to “finish the job” of cancelling student debt.

Borrowers may find themselves enthusiastically agreeing with Ocasio-Cortez and Sanders, as the over 45 million borrowers nationwide had a record $1.75 trillion in student debt in 2021. The states of West Virginia, New Hampshire, Pennsylvania,and South Dakota being most afected, CNBC reported last September.

A Bankrate survey released Wednesay found student debt is significantly hampering Gen Z's (ages 18-25) and Millennials' (ages 26-41) ability to save for retirement and to buy a home. In addition, “62% of students who graduated from nonprofit colleges in 2019 had student loan debt,” The New York Times reports.

US Taxpayers Foot the Bill

Republican Florida state Rep. Anthony Sabatini tells Newsmax Finance the cancellation of student debt is “extremely irresponsible.”

“This is class warfare against working-class Americans,” Sabatini said. “Leftist elites in the knowledge sector are expecting free handouts, while the majority of Americans have to pay the bill. America is already in financial disrepair and experiencing massive inflation. This sort of giant spending will only exacerbate this situation.”

Regarding the Federal Reserve’s analysis, Sabatini says “The Democratic Party has become the party of wealthy, anti-American elites. The student loan repayments disproportionately help the most well-off Americans, leaving the working poor behind.” 

Agreeing with Sabatini, Heritage Action executive director Jessica Anderson tells Newsmax Finance, “While President Biden extends the student loan moratorium and the Left renews calls for student debt cancellation, they should be reminded that these measures primarily serve higher earners who are already back to work following the pandemic. This is nothing more than a political move for Biden to make up for the growing dissatisfaction among young voters ahead of the midterm elections — all at the expense of American taxpayers.”

© 2024 Newsmax Finance. All rights reserved.


StreetTalk
For millions of Americans, the hot topics of inflation and the stock market are taking a backseat to another pressing economic issue: $1.75 trillion in student loan debt in the U.S.
student debt, joe biden, student loan forgiveness, 1.75 trillion
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2022-52-20
Wednesday, 20 April 2022 02:52 PM
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