In truth, the federal student loan debt forgiveness plan does not forgive any debts. Instead, it transfers the debt obligations from borrowers to U.S. taxpayers.
U.S. President Joe Biden’s plan to forgive federal student loan debts is a misnomer. The plan does not “forgive” or eliminate the student loan liabilities, it only transfers the obligations and enormous burden from the millions of individual borrowers to the U.S. taxpayers at an projected cost of $400 billion or more. And, you can be almost certain that $400 billion projected figure is a low balled amount.
Student loans are one of the biggest areas of consumer debt in the United States.
As of the fourth quarter of calendar year 2022, there were $1.60 trillion in outstanding federal student loans, versus $1.55 trillion in outstanding auto loans and $986 billion in credit-card debt, according to the Federal Reserve Bank of New York, reports Barron’s.
U.S. President Joe Biden's plan to forgive federal student loans, first announced in August, was blocked by two legal challenges. It is being scrutinized by the Supreme Court, clouding the financial future for many American students and graduates https://t.co/3NqQZSRLxH 1/5 pic.twitter.com/HbuURMlaxa
— Reuters Legal (@ReutersLegal) February 28, 2023
About 26 million Americans have applied for student loan forgiveness since August 2022, and the U.S. Department of Education has already approved requests from 16 million borrowers.
The program forgives $10,000 of debt held by the federal government for individuals who make less than $125,000. It also forgives $10,000 of debt for couples that make less than $250,000, and it forgives up to $20,000 of debt held by Pell Grant holders, who are mostly lower-income borrowers.
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