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Joe Biden expected to announce $10,000 student loan forgiveness program

While moderates and Republicans have questioned the fairness of any sweeping forgiveness, progressives and liberals have pressed the president to extend relief to more hard-hit debtors.

Joe Biden expected to announce $10,000 student loan forgiveness program Wednesday according to local reports. The promised student loan forgiveness from President Biden will cost American taxpayers $300 billion,
A much-anticipated loan forgiveness scheme is set to be announced by President Biden on Wednesday, according to sources familiar with the proposal, according to the Associated Press.

Joe Biden is expected to announce a $10,000 student loan forgiveness program Wednesday

With President Biden’s anticipated announcement on Wednesday to cancel thousands of federal student loan debt and prolong a repayment moratorium until next year, Americans are prepared to foot a nearly $300 billion deal.
The Penn Wharton Budget Model estimates that a $10,000 maximum one-time debt forgiveness for borrowers earning under $125,000 will cost taxpayers about $300 billion.Biden expected to announce $10,000 student loan forgiveness program

Department of education student loan forgiveness

According to the calculations, the cost would increase to almost $330 billion if the program were to be sustained for the standard 10-year timeframe.
The entire details of Biden’s plan were still being worked out and were being kept inside an incredibly small circle within the Biden administration, sources told the Associated Press on the eve of the publication.

While moderates and Republicans have questioned the fairness of any sweeping forgiveness, progressives and liberals have pressed the president to extend relief to more hard-hit debtors.

Federal student debt in the US has risen steadily for years and currently exceeds $1.6 trillion. According to the most recent federal figures, more than 43 million Americans have federal student debt, with roughly a third owing less than $10,000 and more than half owing less than $20,000.

Student loan forgiveness covid

The pandemic-era payment freezes were supposed to end on August 31. Biden did not put a cap on income when he proposed canceling up to $10,000 in debts per borrower while he was running for office. However, the president curtailed that pledge in recent months as increasing inflation took a political toll and he tried to head off political criticism that the cancellation would benefit people with higher take-home pay.how to apply for student loan forgiveness 2022

According to a new analysis from the Committee for a Responsible Federal Budget (CRFB), the $10,000 forgiveness proposal would undercut the recently passed Inflation Reduction Act since it would devour nearly 10 years of deficit reduction and erase disinflationary effects.

“Debt cancellation would raise near-term inflation much more than the IRA will lower it,” the CRFB reported in its assessment. “A $10,000 debt cancellation could initially add up to 15 basis points toward greater inflationary pressure.”

Department Of Education Student Loan Forgiveness

If Biden approves the order, senior department officials are developing the details of how the agency would run a widespread loan forgiveness program. The Education Department has a strategy for erasing student debt.

According to internal agency records, top Education Department officials have created comprehensive plans to implement student loan forgiveness for millions of Americans as they wait on President Joe Biden to make a final decision.

According to the documents, officials from the Education Department are ready to automatically reduce debt for several million borrowers for whom they already have income data within a few months. According to the documents, the majority of other borrowers would self-certify their eligibility for relief and submit an application using a form on Student Aid.gov.

According to the department’s plan, all federal student loans, including parent PLUS loans, graduate loans, and loans held by private companies, would be eligible for loan forgiveness. Additionally, it implies that borrowers who have ever earned a Pell grant—a form of financial aid for low-income families—may be eligible for additional loan forgiveness.

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