President Joe Biden’s proposal to cancel student debts totaling at least $10,000 has split Americans and even some members of the Democratic Party, raising difficult concerns about the cost, appeal, and even constitutionality of the idea.
The total cost of the debt write-off has not yet been disclosed by the White House, but estimates range from $300 billion to more than $1 trillion, making it one of the most expensive presidential moves in history.
Worrisome issues are raised about the operation of the plan, the true cost, who will pay for it, if the American people want it, and even whether Biden is abusing his presidential authority.
In order for readers to participate intelligently in our poll asking if they favour the loan write-off, DailyMail.com conducted interviews with students, tax payers, and economists as well as deconstructed the debt write-off into its component parts.
It is what?
In keeping with a campaign promise, President Joe Biden has announced that his government would forgive $10,000 in student loan debt for individuals income less than $125,000 annually and joint filers making a combined $250,000 annually.
The maximum award for Pell Grant recipients, who are the poorest students, is $20,000.
The White House has only cited a calculation of about $240 billion over a ten-year period rather than providing a detailed breakdown of the costs.
There are a variety of independent estimates from think groups, but the plan is undoubtedly quite costly.
The $605 billion price tag estimated by the Penn Wharton Budget Model may eventually approach $1 trillion.
An anti-deficit organisation called the Committee for a Responsible Federal Budget (CFRB) pegs the price as $440 to 600 billion.
In all cases, the price will be more than the $300 deficit reduction that Vice President Biden achieved over a ten-year period with his arduous tax, medicine, and climate legislation, the so-called Inflation Reduction Act.
Who foots the bill?
The government aims to recover its investment in student loans.
According to the National Taxpayers Union Foundation, the gap will first be covered by raising the national debt, which must later be paid off either by the Federal Reserve printing more money or by imposing an additional $2,500 tax on each taxpayer.
The winner
Twenty million debtors will have all of their debt forgiven, while another twenty one million will have portion of their debt cancelled.
According to the White House, people earning less than $75,000 a year will get about 90% of the relief.
Other people have also won. The conservative think tank The Heritage Foundation claims that cancelling student loans and other government subsidies increases funding for education, raises tuition, and enriches so-called “woke institutions” like Harvard and Yale, which have endowments totaling more than $40 billion apiece.
Who loses?
The taxpayers who fund it, including many of the 240 million Americans without college degrees and the millions of people who received student loans and paid them back, often by working hard and cutting expenses.
The decision might lead to more issues in the future by rising education costs even further and leaving students unsure of whether they should pay back their loans or hang out in the hopes of another government write-off.
William Brotherton, a Texas-based attorney, referred to the debt proposal as “disgusting.”
He took out a loan of $5,000 to attend the University of North Dakota, and he paid it back by working on railways while still supporting his family.
I fail to see why today’s youth can’t get at least a part-time job to avoid graduating from college with a huge debt. According to Brotherton, DailyMail.com. Why should the majority of us foot the bill for this gift?
The winners can potentially be losers, in an absurd turn of events. Beneficiaries would be required to pay up to $1,100 in state taxes in at least 13 states as a result of the $10,000–$20,000 in forgiveness possibly counting as income when taxes are filed.
People and couples living in some of the states with the worst rates of poverty, such Arkansas, West Virginia, and Mississippi, may have to pay more taxes as a result of the cancellation of student loans.
Poll
Do you agree with Biden’s plan to forgive student loans?
156 votes in favour; 1955 against.
Share your thoughts now.
Is it well-liked?
By fulfilling a campaign pledge, Biden was able to support Democrats in the 2018 midterm elections. 54 percent of people supported and 46 percent opposed of the idea, according to a YouGov survey conducted last week of around 2,100 voters.
A weekend survey conducted by DailyMail.com of 2,100 readers revealed that 7% approved of the proposal while 93% opposed it. Readers still have time to submit their choices.
Will it lead to higher inflation?
The consensus is split. According to CFRB, those who get debt forgiveness will begin spending more on cars, homes, and other commodities in a market with limited supply, aggravating already high inflation rates of 8.5 percent.
Others underestimate its impact, claiming that since recipients are freed from making lengthy loan instalments, the money simply trickles out.
The money that was released, according to economist Ali Bustamante of the left-leaning Roosevelt Institute, is “a drop in the bucket considering the total economy.”
Is it lawful?
Whether Biden has the authority to erase massive amounts of debt with the stroke of his executive pen has been the subject of fierce discussion.
The verdict is yet out. Attorneys for the Trump administration came to the conclusion that the government lacks the power to unilaterally forgive all the debts.
President Biden and even House Speaker Nancy Pelosi have said in the past that the executive branch lacks the ability to unilaterally cancel student loans.
In more recent times, Biden has cited the 2003 Heroes Act as the foundation for his legal right to grant debt forgiveness. In times of war or a national emergency, the post-9/11 measure gives the Secretary of Education the authority to suspend or alter student financial assistance programmes.
Cedric Richmond, a consultant to the Democratic National Committee, said on Sunday that the scheme would ‘stand up in court.
Any judicial challenge against the Biden administration would nonetheless need to come from a party with “standing” and proof of harm.
This reduces the number of prospective complainants since those who are subjected to higher taxes or inflation will probably be unable to demonstrate their legitimacy.
BORROWERS INQUIRE ABOUT BIDEN’S DEBT WRITE-OFF
By James Reinl, a DailyMail.com social affairs correspondent
DailyMail.com spoke to former students from all around the country about Biden’s proposal to erase millions of former college students’ debts, which may total up to $600 billion.
A 37-year-old Californian who worked at a car rental business while his college friends partied is among them, as is a mother of three from New York who cleaned rooms to support her family while pursuing a degree and spent 12 years paying back a $80,000 loan.
Meanwhile, a Georgia mother of two enlisted in the military to receive a scholarship for her education. She compared the write-off to the Soviet-style handouts her immigrant parents left in the 1970s and a betrayal of American ideals.
Others, however, supported the debt forgiveness. Freeing struggling grads from “crippling debt,” according to a self-made technology entrepreneur from rural Oregon, would encourage them to take chances and contribute to the economy as a whole.
While classmates celebrated, they were teased at a vehicle rental desk.
Davidson Scott Dorgan, 37, studied business at UC Santa Barbara with a $5,000 Pell Grant. Dorgan worked late hours at a vehicle rental so he wouldn’t graduate with debt.
He acquired a job, repaid his debts swiftly, and is now a married dad-of-two homeowner.
Tired? I closed the Santa Barbara airport rental kiosk until 10 or 11 p.m. Two years of education and summer work, losing out on joy, living, and partying. I wanted to be responsible and advance my profession.
Apparently, I should have borrowed $20,000 and not worked, partied, and had fun.
I’ve urged individuals to repay school debts, stating the government wouldn’t cover them. False. That’s Biden’s issue. It favours risky conduct and debt-shirkers. It recalculates everything. Save for college? What should I tell them about student loans?
Six years of military service earned tuition costs
Marianna Davidovich, 48, from a Ukrainian immigrant family, graduated high school in Florida and served in the military for six years. The government sponsored her Aspen MBA online.
Still, college was difficult for a single mom of two, but it paid off, and she’s now a high-powered communications officer in Atlanta, Georgia.
My family has a motto. We owe nobody. We don’t borrow money and live frugally. Student debt relief is backwards. Not these values founded this nation.
It tells young people, “Don’t worry, take out all the debts you want; they’ll be forgiven.” Biden will help. I’m teaching my kids and other kids how to work hard and succeed.
This nation is becoming like the Soviet Union, with endless queues for handouts and stamps, which my parents fled.
Tech executive doesn’t mind reducing debt
Matt Wallaert, 40, from rural Oregon borrowed $30,000 to study social psychology at Swarthmore College.
After graduating in 2004, he recovered his debt by working 80-hour weeks at two jobs, including the college IT helpdesk.
He started the behavioural science firm BeSci.io and is now a successful entrepreneur, author, and public speaker in San Diego, California.
Because college was costly and I was concerned about debt, I finished in three years. I grabbed every job I could to repay it, spending as little as possible. The year sucked.
You may think I’m the stereotypical “I did it, someone else can do it” guy. But it overlooks debt’s emotional toll.
Debt alleviation is a good use of government cash. It will help individuals release themselves from a 30- to 40-year load. I love that it will affect black Americans disproportionately. People can’t take chances to boost the economy if they’re in debt.
Single mom cleaned dormitories for food.
Lissa Pettenati, 64, a science teacher from upstate New York, borrowed $80,000 to acquire her Master’s degree in the mid-1990s.
She cleaned other students’ dorms for two years to pay rent and feed her three kids.
She returned to teaching after college and paid off her debt in 12 years on a $40,000 annual wage. She teaches in New Jersey and has thirties-old kids.
I’m enraged. I repaid it. Now that I’m a senior, I’ll pay for others’ private school degrees. This stinks
I could have saved those years of loan payments for my kids’ education instead.
Biden donates cash. Who will pay for these billions and trillions? All of this debt will effect my grandkids. I’m ready for the depression on my New Jersey farm.
How do you apply for student debt relief? DailyMail.com addresses your questions on Biden’s debt plan.
By DailyMail.com’s Morgan Phillips
Wednesday, the Biden administration presented a proposal to wipe away debt and restructure student loan borrowing, benefiting 40 million Americans with $1.7 trillion in federal student debt.
Plan details:
Eligible?
Single filers earning less than $125,000 and joint filers making less than $250,000 are eligible for $10,000 in federal loan forgiveness. Pell Grant recipients may wipe away $20,000 of their debt if they make less.
No matter how much college a borrower attended, forgiveness is extended to both dropouts and graduates.
Those with 10-year loan sums under $12,000 are also forgiven. Before, such balances took 20 years to disappear.
Application?
The Education Department already has 8 million people’s income information on file, according to the Federal Student Aid (FSA) website.
In the coming weeks, the Biden administration will unveil an income-input app. The application will be accessible before Jan. 1, 2023.
Here, borrowers may sign up for application alerts.
Who gets greater assistance?
Borrowers who have worked for non-profits, the military, or federal, state, tribal, or municipal government for 10 years or more may have their debts forgiven.
PSLF amendments expire Oct. 31.
After 120 payments in public service, the programme forgives federal student debts.
Other changes?
The student loan repayment freeze was prolonged until 2022. The Biden administration also changed income-based repayment arrangements so debtors don’t pay more than 5% of their monthly discretionary income.
‘No borrower’s loan debt will rise as long as they make monthly payments,’ says the federal government, which is now accountable for unpaid monthly interest.
Unemployed or low-income borrowers earning $0 per month will be covered.