Some celebrate, while others question fairness of Biden's student loan forgiveness plan
Last week, President Biden announced his long-awaited plan to provide financial relief for those struggling to keep up with student loans.
The government will forgive up to $10,000 in federal student loan debt and up to $20,000 for Pell Grant recipients who have an annual income of under $125,000 or under $250,000 for married couples or heads of households.
While some are celebrating the debt forgiveness, others are questioning the fairness of the plan.
Oklahoma congressmen Markwayne Mullin and Kevin Hern both tweeted against the loan forgiveness last week following the president's announcement.
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Mullin said the program places an "undue burden on those already suffering due to the weight of Biden’s failed economic policy," while Hern described it as "supercharging" the IRS to go after working-class Americans.
Cynthia Campbell who oversees the entire financial counseling department for BALANCE, a national nonprofit and housing agency, said interest rates and the cost of tuition were exponentially less expensive when she was in school — so it wouldn't be fair to compare the price of college from then to now.
"When I went to school, it was so much cheaper," Campbell said. "The credit hours were so much less than they are now. So, I don't think we're comparing apples to apples and the cost just keeps going up."
During his announcement, President Biden said the cost to attend a four-year university has nearly tripled over the last 40 years.
While the plan is expected to help relieve a large burden from loan borrowers, Campbell said she doesn't believe that the money forgiven will create a demand-pull inflation dynamic where the need for products or services exceeds production capacity.
"The fact that it was forgiven doesn't put money directly in their pockets — they haven't been paying for it for two years," Campbell explained. "So it's not like a rush of money is going to hit, it's just that instead of putting that $250 toward their loans their putting $250 toward their business, or a down payment on a house."
The pause on federal student loan payments is being extended for the "final time" that lasts through the end of 2022. According to the U.S. Department of Education, some may qualify for relief automatically based on the income data the department already has.