Finance & Economics

Joe Biden Administration Cancels More Than $9 Billion in Student Loans

The White House has decided to cancel the debt for 125 thousand borrowers on student loans.

Joe Biden Administration Cancels More Than $9 Billion in Student Loans

The total amount of arrears, which was canceled by the decree of the administration of the President of the United States Joe Biden, is more than $9 billion.

The debt burden on student loans was eased amid the resumption of payments on these loans for Americans after a break that lasted three years, beginning during the coronavirus pandemic.

In the press release of the US presidential administration, which was published last Wednesday, October 4, assistance was divided into three categories. The amount of 5.2 billion will be written off for 53 thousand borrowers under the Public Service Loan Forgiveness programs. The debt of almost $2.8 billion, which was a financial burden for 51 thousand citizens, was canceled as a result of making appropriate changes to the government’s policy. In this case, it implies a political line for repayment of loans based on income.

The press release states that the debts were canceled in respect of those borrowers who made payments for 20 years or more, but did not receive benefits, having full rights to them according to the current legislation.

The White House also decided to forgive $1.2 billion of financial obligations of almost 22 thousand citizens who have a total or permanent disability.

The press release of the US presidential administration contains information that as of today, a total of $127 billion worth of student loans have been canceled, which is a small fraction of the approximately $1.7 trillion owed to Americans for this type of loan.

This news, according to experts, is unequivocally positive for young borrowers who are in a state of psychological pressure due to the resumption of payments on student debts. Statistics show that these citizens are much less concerned about inflation than about the mentioned financial burden. According to the results of a special study, it was found that about 25% of all consumers of Generation Z, millennials, and bridge millennials, in the context of their own perception of economic realities, first of all, think about paying off student loans. The issue of inflation from the point of view of importance for these citizens is secondary.

Also, the results of the study showed that 43% of borrowers who were concerned about payments in the summer were confident in the deterioration of their personal financial situation. At the same time, 36% of respondents with a significant share of pessimism assessed the ability to pay monthly bills. The ability to cover everyday expenses was a cause of excitement for 35% of the study participants.

Experts noted that the resumption of payments on student loans delays the implementation of other plans and goals, the implementation of which is impossible without financial costs. They also stated that for many people, the need to fulfill obligations on a loan will be a reason to temporarily abandon the purchase of a house, marriage, and the birth of a child.

Representatives of Generation X have become the most vulnerable group in the context of economic realities, since in their case the financial burden includes taking care of children and aging parents. The continuation of payments for student debts has become a factor that has significantly complicated the well-being of these citizens.

As we have reported earlier, American Banks Lose Nearly $19 Billion in Loans.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.