U.S. President Joe Biden on Wednesday announced a partial forgiveness of student loans, an issue that has been a hotly debated topic in a country where a year at college can cost tens of thousands of dollars.
“In keeping with my campaign promise, my administration is announcing a plan to provide relief to working and middle class families as they prepare to resume repayment of federal student loans in January 2023,” Biden wrote on Twitter, promising to provide details later this afternoon.
The measure, announced less than three months before the midterm elections, affects people earning less than US$125,000 (C$162,096) a year, according to an illustration accompanying the president’s release.
It will erase US$10,000 (C$12,962) for those who did not receive a federal grant to pay for college, and US$20,000 (almost C$26,000) for those of more modest means who did.
The plan was announced after months of White House consideration of the issue, which has also been a headache for previous administrations. The executive branch was particularly concerned that the measure would fuel already rampant inflation.
Democratic Senators Chuck Schumer and Elizabeth Warren hailed in a joint statement “a giant step toward solving the student debt crisis.”
Republican Party leader Ronna McDaniel, on the other hand, called the measure “unfairly punishing Americans who have saved for college or made a different career choice.”
A college education in the United States can cost between US$10,000 and US$70,000 (about C$13,000 to C$91,000) a year, and many students begin their professional lives with heavy debt.
According to government estimates, the average U.S. student’s debt when they graduate is $25,000, an amount that many take years, even decades, to pay off.
In total, some 45 million borrowers nationwide collectively owe $1.6 trillion, according to the White House.
Biden also announced that the moratorium on student loan repayments instituted during the COVID-19 pandemic would be extended through the end of the year.