Biden pitches for students with a total debt forgiveness of $39bn
Washington: US President Joe Biden is sending out clear and pleasant messages to the American people ahead of the midterms in November that his administration cares for the American people unlike the ultra-right-wing republicans who only want to endorse ex-President Donald Trump’s claims of a stolen election, fueling Capitol Hill riots and “fake claims” of a bad economy.
The Democrats Department of Education’s decision to cancel $3.9 billion in student loan debt associated with ITT Technical Institute, a private, for-profit educational chain that went bankrupt six years ago is a clear signal to the students that it has conceded their demands and cares. The department will automatically cancel all loans for students who attended ITT from January 2005 to September 2016, affecting roughly 208,000 borrowers.
The debt forgiveness comes atop Biden’s signing into law the historic climate change, health care, and inflation reduction besides the semiconductor bill and a slew of other measures aimed at improving the general welfare of the Americans, especially the poor, urban middle class families with low drug prices, tax incentives and creating more jobs.
Before declaring bankruptcy, ITT had been under investigation for a variety of deceptive practices. “The evidence shows that for years, ITT’s leaders intentionally misled students about the quality of their programs in order to profit off federal student loan programs, with no regard for the hardship this would cause,” Education Secretary Miguel Cardona said in a statement Tuesday.
Cardona also said that the Biden administration would “continue to stand up for borrowers who’ve been cheated by their colleges, while working to strengthen oversight and enforcement to protect today’s students from similar deception and abuse.” Including this most recent announcement, the Biden administration has forgiven nearly $32 billion in student loans.
Even as Budget hawks lobby against broad debt forgiveness, the Biden administration is currently considering what to do about the nation’s $1.5 trillion student loan portfolio, payments on which were suspended repeatedly during the Covid-19 crisis.
Though the most recent extension of the suspension expires at the end of August, many analysts expect the administration to extend the pause again, at least through the end of the year, according to multiple reports in the US media.
Equally, some student loan activists have been calling on the White House to forgive student loan debt, in full or in part, with forgiveness of $10,000 per borrower being one frequently cited option.
On Tuesday, the Committee for a Responsible Federal Budget, a fiscally conservative group that generally opposes student debt forgiveness, published an analysis of the cost of doing so.
Extending the payment pause for the rest of the year would cost $20 billion, CRFB estimated. And cancelling $10,000 in debt for middle- and low-income borrowers (defined as earning less than $300,000 per year) would cost $230 billion over 10 years.
The CRFB analysts note that the cost would wipe out much of the budgetary savings provided by the climate and health bill signed into law by President Biden on Tuesday. “Combined, these policies would consume nearly ten years of deficit reduction from the Inflation Reduction Act,” CRFB said.