Biden announces relief for university debts

WASHINGTON

President Joe Biden on Aug. 24 announced that most Americans trying to pay off university loans will get $10,000 forgiven in a bid to address the decades-old headache of massive educational debt across the country.

“In keeping with my campaign promise, my administration is announcing a plan to give working and middle class families breathing room,” Biden said in a statement issued less than three months before midterm congressional elections, where the issue is seen as a vote winner for Democrats.

“All this means people can finally start crawling out of that mountain of debt,” he said. “When this happens, the whole economy is better off.”    

The proposed debt relief falls far short of some Democrats’ goal of securing complete forgiveness.    

There was also immediate debate over whether effectively giving millions of people a cash injection will stoke already rampant inflation.

Jason Furman, formerly the chief economic advisor in Barack Obama’s White House, tweeted that “pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless.”    

The White House was unable to say how much the debt cancellations would cost, explaining that the amount will depend on how many people take up the deal.

According to government estimates, the average debt for U.S. college students when they graduate is $25,000, a sum many require years or even decades to pay back.

U.S. colleges can often cost anywhere between $10,000 and $70,000 a year, leaving some graduates with crushing debt as they enter the workforce.

In total, some 45 million borrowers nationwide owe a collective $1.6 trillion.