This announcement was made with regards to the plan to wipe out $10,000 of debt for many, and a further $10,000 for those whose income falls below $125,000.
“Both of these targeted actions are for families who need it the most: working and middle-class people hit especially hard during the pandemic,” Biden said at the White House.
Biden will also extend a moratorium on student loan payments until the end of the year – for the “final time,” according to the White House.
Former students – and current consumers – carry a massive $1.75 trillion in student debt. According to federal data, some 43 million people are burdened with an average debt of $37,667.
According to a study by the Brookings Institution, debt cancellation would reduce the wealth gap between white and Black people who took out loans, with the latter owing, on average, $25,000 more because they had needed to borrow more in the first place. Some Democrats have called for debt forgiveness of up to $50,000 to enable younger people to save for bigger purchases such as down payments for homes. The decision could also give a boost to the Democrats ahead of the midterm elections in November.