Up to $20,000 Interest Forgiveness for 25 Million People
Easing Student Loan Burden During Financial Hardship
Republican Lawsuit Possible Over 'Abuse of Power' Allegations
U.S. President Joe Biden, ahead of the November presidential election, has unveiled a student loan forgiveness plan. It is expected to primarily benefit the younger generation and people of color, who helped secure his victory four years ago. However, legal challenges from the Republican Party remain a variable.
On the 8th (local time), President Biden visited Madison, Wisconsin, a key battleground state, and announced a new student loan forgiveness plan during a speech themed "Lowering the Cost of Living for Americans." The plan aims to forgive interest for up to $20,000 for approximately 25 million borrowers.
Specifically, borrowers with an annual income of $120,000 or less (or $240,000 or less for married couples) will have their loan balances forgiven beyond the principal amount. The plan also includes debt relief for borrowers who have been repaying loans for over 20 years (25 years for graduate school) and those participating in job training programs.
Additionally, relief will be provided to those whose colleges suddenly closed and lost eligibility for the federal student loan program, as well as those struggling with living expenses due to medical bills and childcare. The White House estimates that about 30 million people will benefit from the Biden administration’s debt relief program.
In his speech, President Biden pointed out, "Today, too many Americans, especially young people, are burdened by unsustainable debt in exchange for a college degree," adding, "Many workers and middle-class individuals have been unable to repay their loans even decades after graduating."
He continued, "The weight of student loan repayment leads to burdens on marriage, childbirth, home purchases, and entrepreneurship, ultimately holding back the economy," emphasizing, "Continuing student loan forgiveness for hardworking Americans is also good for our economy."
Biden’s student loan forgiveness plan is seen as a move to win back the votes of young voters in their 20s and 30s and people of color, who are the core beneficiaries of the policy. Biden won the 2020 election by leveraging strong support from young people and people of color against former President Donald Trump, but recent reports from local media such as The Wall Street Journal (WSJ) indicate that their support for Biden has significantly declined compared to four years ago.
According to a poll conducted last month by research firm Social Sphere, surveying over 3,800 U.S. voters, 48% of respondents identified student loan forgiveness as a key issue in the 2024 U.S. presidential and congressional elections. The New York Times (NYT) assessed that if President Biden succeeds in implementing the debt relief plan before the November election, it could help regain the support of young voters.
However, legal uncertainties still exist. Previously, in 2022, President Biden pushed a student debt forgiveness program that provided support worth $146 billion to about 4 million people, but it was halted by the U.S. Supreme Court on grounds of executive overreach. The NYT noted that the Republican Party, which has opposed student loan forgiveness, may file another lawsuit.
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