President Biden on Wednesday responded to criticism of his action canceling up to $20,000 in student loan debt for borrowers earning $125,000 or less, saying his administration is “taking an economically responsible course.”
“I understand not everything I’m announcing today is going to make everybody happy,” Mr. Biden said during a White House address on his plan. “But I believe my plan is responsible and fair. It focuses the benefit on middle-class and working families. And it will fix a badly broken system.”
Republicans say Mr. Biden‘s plan will add to inflation and is unfair to those who have paid off their student loan balances, or chose not to go to college because of the cost. Some progressives say Mr. Biden didn’t go far enough in relieving the debt burden for student borrowers.
Mr. Biden on Wednesday unveiled his long-awaited plan, which includes canceling $10,000 in student debt for borrowers who earn less than $125,000 per year and $20,000 in debt for those who received Pell Grants.
The president has also extended the pause on federal student loan payments through December, the White House announced.
Mr. Biden‘s plan also calls for lowering monthly payments on outstanding undergraduate loans from 10% to 5% of discretionary income, and forgives loan balances after 10 years of payments instead of 20 years for original loan balances of $12,000 or less.
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“All this means people can start finally [to] crawl out from under that mountain of debt, to get on top of their rent and utilities, to finally think about buying a home or starting a family or starting a business,” Mr. Biden said. “And by the way, when this happens, the whole economy is better off.”
Many liberal activists cheered the action. MoveOn Executive Director Rahna Epting called it “the biggest and boldest action a president has ever taken to provide student debt relief to struggling families.”
Critics said Mr. Biden lacks the authority to take the action, and that it will increase federal deficits and worsen inflation.
Mr. Biden‘s opponents, and some Democrats, have argued that student loan cancellation is a form of government spending and Congress, not the executive branch, controls the government’s wallet.
The plan will also face stiff backlash from Republicans who have consistently bashed Democrats for spending that they say is out of control and a key driver of inflation. Opponents also say the plan offers an unfair advantage over those who have repaid their debt or who chose not to go to college.
“Washington Democrats have found yet another way to make inflation even worse, reward far-left activists, and achieve nothing for millions of working American families who can barely tread water,” Senate Minority Leader Mitch McConnell, Kentucky Republican, said Wednesday.
Mr. Biden fired back at Republicans for voting for tax cuts while failing to help those saddled with debt. He also pushed back against criticism that the plan would add to inflation, saying that the cost of canceling debt will be offset by resuming loan repayments that have been paused during the pandemic.
“About $50 billion per year will start coming back into the Treasury because of the resumption of debt,” he said. “Independent experts agree that these actions taken together will provide real benefits for families without meaningful effect on inflation.”
“The outrage over helping working people with student loans, I think he‘s just simply wrong,” he said. “Dead wrong.”