US President Joe Biden is cancelling billions of dollars of federal student loans.
The unprecedented plan, which will cost the US government over $300bn, has been introduced to help students amid ballooning tuition costs.
This news comes as total federal student debt has more than tripled over the past 15 years rising to $1.7tn in 2022.
In August, Biden announced he will cancel $10,000 of student loan debt per borrower for millions of Americans earning less than $125,000 a year, the equivalent of over £9,000 based on recent conversion rates.
He also announced those on need-based Pell Grants, given to low-income undergraduates to promote access to higher level education, will be forgiven up to $20,000.
The measures are expected to help millions of Americans who are struggling to pay off their debt amid rising tuition costs and stagnating wages, as the US sits on the verge of a ‘cost of living’ crisis.
It is estimated that 43 million Americans, the equivalent of one in six American adults owe an average of $17,000.
Whilst nearly a third of borrowers owe less than $10,000 and almost half owe less than $20,000, 7% owe over $100,000.
It is estimated that under the Biden-Harris student loan plan all 43 million students will be helped, whilst all loans will be eliminated for 20 million Americans.
Over the last month since the measures were announced, Biden has faced considerable backlash to the plan.
One of the plan’s staunchest right-wing opponents, among many, Texan Senator Ted Cruz has already laid out plans to threaten Biden’s plan with legal action whilst speaking on a right-wing podcast.
Not only has this come from Trump supporters but also from young educated left-wing voters originally considered to be Biden supporters.
This is because of the huge cost to the government, totalling $300bn, which people view as detracting from services.
Other opposition includes that it won’t help those at the bottom, as Biden has yet to choose how much to cancel and for whom.
Speaking from the White House briefing room shortly after the plan was announced, Biden said the targeted plans will help working class and middle class people hit hardest during the pandemic.
However, many people have hit back stating that it won’t help those at the bottom and those who owe a greater amount.
Proponents of the plan say the cancellation will help to narrow the racial wealth gap, due to the fact that black students are three times more likely to be borrowers and are therefore more likely to be in debt than other students of different races.
According to a Brookings Institute Study, black students who borrow student loans owe, on average, $25,000 more than their white counterparts within four years of leaving higher education.
Student loan activists have also rejoiced at the plan, noting their surprise that Biden has chosen to cancel the debt as opposed to deferring payments until after the Covid-19 pandemic and its various effects on the economy have passed.
However, the plan still falls short of what many activists wanted.
The news was announced to attract support from Democratic voters ahead of November midterm elections and encourage younger voter turnout.
According to analysis of voter behaviour in the US, Democrat voters tend to be college-educated whereas Republicans tend to have high school qualifications or lower.
Additionally, black voters tend to be Democrat, whereas the Republican voting bloc is almost entirely white.
However, the plan is thought to anger some young, educated voters who have already paid off their loans
College education has long been linked to increased job opportunities, higher salaries and career growth, but with ever-increasing tuition costs resulting in increased student debt, many are turning away from the education model they view as broken.
Even Pell Grants, applied to those in most financial need, which used to pay for 80% of the cost of a four-year public college education, now pay for, on average, 30%.
As public funding for university decreases, younger people are accumulating more and more student debt, more than credit cards or car payments.
According to the Federal Reserve, on average people pay $222 per month to pay off their student loans, with student debt the second-largest type of household debt.