(WASHINGTON, DC) — The White House says that the Dept. of Education allows the president to forgive student loan debt based on income. As a result, President Biden announced that he is “forgiving” billions in student loan debt and his proposal has come under fire from both sides of the aisle.
Democrats say it’s not enough, pushing for up to $50-thousand in financial relief rather than the $10,000 proposed by the president.
And republicans argue it’s unfair to people who have already paid off their loans and believe the move could fuel inflation by adding $300 billion to the debt.
Biden argues that resuming student loan payments will also be inflationary.
There is a question as to whether or not President Biden has the power to forgive student debt and lawsuits are already flying.
According to the White House “fact sheet” on Student Loan Relief the Department of Education has the authority to create income-driven repayment plans which in turn gives the president the imprimatur to forgive $10,000 in debt to people who make less than $125,000.
“The Administration is reforming student loan repayment plans so both current and future low- and middle-income borrowers will have smaller and more manageable monthly payments.
The Department of Education has the authority to create income-driven repayment plans, which cap what borrowers pay each month based on a percentage of their discretionary income. Most of these plans cancel a borrower’s remaining debt once they make 20 years of monthly payments. But the existing versions of these plans are too complex and too limited. As a result, millions of borrowers who might benefit from them do not sign up, and the millions who do sign up are still often left with unmanageable monthly payments.”
It’s estimated 42 percent of those who go to college pay back loans over five years.
The average American household with student debt owes nearly $59-thousand.
More information on claiming relief will be available to borrowers in the coming weeks.
Borrowers can sign up to be notified when this information is available at StudentAid.gov/debtrelief.