Biden introduces a contentious plan to reduce the student loan burden.

The payouts, according to critics, will just fuel inflation and do nothing to address the nation's debt crisis.

US President Joe Biden announced his long-promised student debt loan forgiveness plan on Wednesday, declaring he was honoring a campaign committee with the package, which forgives $10,000 in student loan debt for those making under $125,000 per year and extends a pandemic-era pause on loan repayments.

The president's detractors on the left, however, claim that the proposal simply relieves a small (and largely wealthy) share of the nation's $1.7 trillion in student loan debt, while his detractors on the right claim that it will ultimately penalize the nation's poor by escalating inflation. Some even contend that he lacks the power to cancel the loans at all.

Debtors repaying Pell Grants, which are federal financial aid packages provided to students who can demonstrate need, may have up to $20,000 ($75,000 for married couples) or $10,000 ($125,000 for singles) of their loans forgiven. A pandemic-era hold on repayments has been extended through the end of the year, and those who make under $125,000 annually but acquired loans through some other means—i.e., they weren't sufficiently impoverished to qualify for a Pell Grant—can still receive $10,000 shaved off their loan cost.

Given that the average loan load is $37,667, progressives calling for loan forgiveness had wanted $50,000 or even the complete repayment of student loans. The loan matter is viewed as essential to lure young voters to the Democratic Party in the upcoming election.

According to the Penn-Wharton Budget Model, the program will cost between $300 billion and $980 billion over the next ten years. The Republican members of the House Ways and Means Committee contend that this will punish the poorest Americans by accelerating inflation at the expense of the relatively well-off. Since 87% of Americans don't even have student loans, they receive no benefits from the package and are still responsible for paying the inflation costs.

Many of the president's detractors have claimed that his cabinet is not legally permitted to forgive debts without congressional consent. In a legal statement released on Wednesday, the Education Department stepped in to defend Biden, stating that the 2003 HEROES Act gives it the authority to suspend or amend federal student loan regulations during a proclaimed national emergency, such as the recently expanded coronavirus pandemic. A memo written by a Trump-era appointee and published last January that explicitly stated the Secretary of Education does not have the authority to cancel loans in their entirety has been officially retracted.

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