The number of loans to help Americans obtain a college education has increased recently, as tuition costs rise and more high school graduates enter higher education.
Student debt is now one of the largest forms of consumer borrowing for Americans.
US President Joe Biden poses for a photo during his visit to a cafe in Los Angeles on Wednesday.credit: AP
Mass cancellation of student debt — which has never happened before — is seen as a goal of Biden's broader efforts to rebuild the middle class.
“Most economists view student loan programs as a sound investment in American workers and essential to maintaining the country’s competitive advantage, but questions remain about the appropriate level of federal involvement,” the independent Research Council on Foreign Relations wrote.
A 2017 study by the US Federal Reserve found a link between higher student debt and lower home ownership.
download
“A $1,000 increase in student loan debt reduces the homeownership rate by about 1.5 percentage points for four-year public college students during their mid-20s,” the report found.
Biden announced the new loan repayment plan last year along with a separate plan to cancel up to $20,000 in loans for millions of Americans.
His plan for a broad pardon was struck down by the Supreme Court, but the repayment plan has so far escaped that level of legal scrutiny. Unlike his proposal for mass repeal – which has never happened before – the repayment plan is a distortion of the income-based plans that Congress created more than a decade ago.
Biden said he remained steadfast in his commitment to “fixing our broken student loan system,” and working around the court ruling to find other ways to accomplish that.
download
Biden's latest move — which benefits those enrolled in the government's Savings on Value Education (SAVE) plan — eliminates loans for those who borrowed less than $12,000 for their higher education.
The maximum repayment period is 20 years for those with undergraduate loans only, and 25 years for those with any graduate loans.
A plurality of Gen Z voters — 43 percent — said Biden has done too little to address student loans, according to a Bloomberg News/Morning Consult poll of voters in swing states released in December. However, 46 percent of voters in swing states overall said they support the administration's student loan forgiveness programs, showing divisions on the issue.
The latest round brings the total relief approved by the Biden administration to approximately $138 billion, benefiting 3.9 million borrowers. This number could grow as more people qualify for amnesty under the SAVE program, which has 6.9 million people registered. Administration officials declined to estimate how many borrowers would eventually receive loan forgiveness under the program.
Bloomberg, Associated Press with reporter
Get a direct note from our foreigners Reporters About what's making headlines around the world. Subscribe to the weekly What in the World newsletter here.
