Biden Student Debt Forgiveness Plan
The Biden administration on Wednesday announced it was canceling up to $10,000 of student debt for millions of people and up to $20,000 of debt for low- and middle-income borrowers who previously received a Pell Grant. The loan relief will be limited to borrowers who earn less than $125,000 a year or families earning less than $250,000. The pandemic-related moratorium on interest and payments, which started in March 2020 in the Trump administration and has been extended four times by Biden, is set to expire Aug. 31. the White House plans to extend the moratorium on monthly payments and interest for a “final time” through Dec. 31. Yesterday’s announcement has drawn criticism from the right that the key elements of the plans would increase inflation.
Biden’s announcement that the Education Department would cancel an unprecedented amount of student debt is likely to draw legal challenges. Many Republicans have argued the executive branch lacks the authority to provide such sweeping relief without congressional authority.
The recent passage of this Student Debt Forgiveness Plan and signing of the Inflation Reduction Act is expected to do little to curtail inflation in the next 10 years. In fact, estimates show that it may even increase inflation through spending offset through a 15% corporate minimum tax, IRS tax enforcement, and closing a loophole that benefits wealthy investors. Read more HERE
St. Louis Federal Reserve President James Bullard on Thursday said inflation is remaining more persistent and widespread than many observers predicted. He also stated the Fed should continue aggressively raising interest rates and repeated he would like to see the Fed’s benchmark rate to climb from 2.25% to 2.5% to between 3.75% and 4%. This concern and call to action was recommended by others.
There will be more details announced in the coming weeks. To be notified when the process has officially opened, sign up at the Department of Education subscription page.
More information can be found here and here.