At least $300 billion in subsidies to upper-middle-class families! Biden to announce student loan forgiveness plan

time:2023-01-30 author:Trend
At least $300 billion in subsidies to upper-middle-class families! Biden to announce student loan forgiveness plan

As the mid-term elections in November loom, US President Biden is "under a lot of pressure". After experiencing the double crit of high inflation and recession during his tenure, in order to continue to win the hearts of voters, Biden is expected to come up with a long-prepared "killer" this Wednesday. That's a student loan forgiveness program totaling at least $300 billion. The media quoted people familiar with the matter as saying that for months Biden has been considering a one-time relief of up to $10,000 in federal student loans for borrowers with incomes up to $125,000. And it is expected that in response to the previous student loan deferral plan, Biden may postpone the repayment period from the original August 31st for several months to December 2022, which may help the Democratic Party in the midterm elections. win more support from young voters. Student loan forgiveness could reach $300 billion to $980 billion over the next 10 years, according to an analysis released Tuesday.

Goldman Sachs: The upper middle class are the biggest beneficiaries

Which groups are expected to benefit the most from this student loan forgiveness program? Goldman Sachs said it is the upper middle class. As early as 2021, when Biden first proposed a plan for debt relief of $10,000 to $50,000 for each student, Goldman Sachs has calculated that the biggest beneficiaries of this move theoretically are the middle and upper classes. Goldman Sachs chief economist Jan Hatzius writes: While more than 43 million people have nearly $1.6 trillion in federal student loans, the majority of student loans are held by middle- and high-income households, with more than half of them (including the vast majority of Most large loans) are held by highly educated families with graduate or professional degrees. And Goldman Sachs also pointed out in its analysis that student loan forgiveness totaled $300 billion, or about 1.2% of GDP. However, within a year of the implementation of the plan, its contribution to consumption growth was less than 0.1% of GDP, and it did not have a significant impact on the economy.

Supporters are not entirely satisfied

Supporters, including lawmakers, civil rights members and labor leaders, remain unhappy with the scale of the student loan relief. They are understood to have pressed the White House to increase student loan forgiveness, saying the debt has been disproportionately borne by black or low-income students, and they want the loan forgiveness to be increased to $50,000 per student. NAACP president Rose Khattar said in a statement Tuesday: "If the rumors are true, then the problem arises. Sadly, we've been through it many times before... that's not how you treat black voters who are turning out a record 90 percent. And Senate Majority Leader Chuck Schumer, in a phone conversation with Biden on Tuesday night, also urged Biden to cancel as much debt as possible, a Democrat said.

Push up inflation or curb inflation? This is a question.

In addition, there is a lot of controversy about whether the plan will increase inflation in the United States. On the one hand, former Treasury Secretary Summers warned that the student loan forgiveness program would drive up prices and said the "worst idea" would be to lower loan repayments. On the other hand, Rose Khattar, deputy director of economic analysis at the Center for American Progress, mentioned in a statement on Tuesday: $10,000 in student loan forgiveness is not a decisive factor in fighting inflation... On the contrary, the move will Millions of Americans and their families are helping to improve their current and future economic security. This article is from Wall Street News, welcome to download the APP to see more
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