On Wednesday, Vice President Joe Biden announced that the United States government would cancel $10,000 in student debts for millions of debt-ridden grads.
It’s possible that this will help the Democrats in the next midterm elections in November, but there have been concerns raised by economists and Republicans in Congress about the potential for higher inflation as a result of this action.
Economists have warned that the debt forgiveness could add a new dimension to the country’s inflation fight by freeing up hundreds of billions of dollars for fresh consumer spending that might be focused at home purchase and other large-ticket expenses.
These measures are “for families that need them the most — working and middle-class folks hit most hard during the pandemic,” Vice President Joe Biden said in a White House address. Addressing a major critique of the scheme, he promised that no households with high incomes would benefit.
In reference to the Republican tax cut passed under former President Trump, Biden said, “I will never apologize for helping working Americans and the middle class, especially not to the same folks who voted for a $2 trillion tax cut that mainly benefited the wealthiest Americans and the biggest corporations.”
Since the commencement of the COVID-19 outbreak, borrower balances have been frozen, and no payments are due on most federal student loans until March 2020. There was a call from Democrats for Biden to forgive up to $50,000 in debt per borrower.
Most Republicans were against the plan to erase student loans, arguing that it skewed the benefits toward those with higher salaries and was therefore unjust.
Senate Minority Leader Mitch McConnell said on Wednesday that President Joe Biden’s plan to make student loans more affordable is “a slap in the face to every family that sacrificed to save for college,” adding, “Every graduate who paid their debt,” and adding that “every American who chose a certain career path or volunteered to serve in our Armed Forces in order to avoid taking on debt,” is also offended by the plan.
Mahnur is MS(development Studies)Student at NUST University, completed BS Hons in Eng Literature. Content Writer, Policy analyst, Climate Change specialist, Teacher, HR Recruiter.
