Joe Biden cancels US$10,000 in student loan debts for millions of Americans
- The move could boost support for the Democrats in the coming midterm elections, but could also fuel inflation
- US consumers carry a massive US$1.75 trillion in such debt from university tuition fees that are substantially higher than most rich countries
President Joe Biden said on Wednesday the US government will forgive US$10,000 in student loans for millions of debt-saddled former college students, keeping a pledge he made in the 2020 campaign for the White House.
The move could boost support for his fellow Democrats in the November congressional elections, but some economists said it may fuel inflation and some Republicans in the US Congress questioned whether the president had the legal authority to cancel the debt.
Cancelling the debt will free up hundreds of billions of dollars for new consumer spending that could be aimed at homebuying and other big-ticket expenses, according to economists who said this would add a new wrinkle to the country’s inflation fight.
The actions are “for families that need them the most – working and middle class people hit especially hard during the pandemic”, Biden said during remarks at the White House. He pledged no high-income households would benefit, addressing a central criticism of the plan.
“I will never apologise for helping working Americans and middle class, especially not to the same folks who voted for a US$2 trillion tax cut that mainly benefited the wealthiest Americans and the biggest corporations,” Biden said, referring to a Republican tax cut passed under former president Donald Trump.