Forgive and forget
President Biden's announcement this week that up to $10k of outstanding student debt per person will be forgiven is an historic — although divisive — moment.
As our coverage back in April showed, federal student loan debt in America has ballooned in recent decades to around $1.6 trillion — more than what is owed by American consumers on car loans and credit cards.
Estimates suggest that Biden's debt cancellation could cost somewhere around $300bn, equivalent to roughly 19% of all outstanding student loans. Student debt is split amongst more than 46 million Americans, with a pretty wide-range of outstanding balances. Data from the Dept. of Education (via NBC) shows that just shy of 15m people owe less than $10k, and will therefore be debt-free if they earn under the $125k threshold.
Long division
Biden’s announcement has been warmly welcomed by some factions, with many keen to praise the particularly progressive $20k write-off clause for students who received Pell Grants (those who required the most financial assistance). However, the costly policy has been a source of controversy as well as celebration, with critics arguing that the debt-canceling outlay is a voter-bribe, wasteful, plain old unfair or a risk to higher inflation.
