Staff Reports
The beneficiaries of President Joe Biden's proposal for student loan forgiveness who earn the highest incomes stand to gain the most financially.
According to a new study from the University of Pennsylvania, the aggregate amount that taxpayers are obligated to retain increases to $559 billion as a result of a new round of student loan cancellation programs. Among these provisions, $84 billion were unveiled last week.
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The Penn Wharton Budget Model of the University of Pennsylvania determined that the latest round of cancellations would not significantly assist those who were facing financial hardships, unless their diet exclusively comprised costly goods.
Some higher-income households would benefit from the new plan, according to the study, which contradicts Biden's customary rhetoric. In an effort to provide some relief to student loan recipients, additional loan cancellations for 277,000 borrowers were disclosed last week, despite the fact that the income-driven plan had been in place since last summer.
According to a study by the University of Pennsylvania, the new programs will alleviate some long-term student debt for approximately 750,000 households with an average household income of $312,000. This entails the exemption of accrued and capitalized interest on loans for borrowers carrying current balances that surpass the initial balance, as well as the elimination of undergraduate debt for borrowers who have repaid it for a period exceeding 20 years or graduate debt for a period of 25 years.
It appears, however, that those who are close to the income threshold that Biden defines as affluent and therefore eligible for higher taxes are benefiting from his plan. Republican Rep. Jodey Arrington, chairman of the House Budget Committee and a representative from Texas, criticized the plan, describing it as a "quest to buy votes" and noting that it will increase the debt of all taxpayers.
Although the plan is intended to alleviate student debt, it primarily benefits households with higher incomes rather than those who are experiencing financial hardship. It is evident that Biden's strategy prioritizes garnering support prior to the subsequent election over effectively assisting those in need.
