President Joe Biden students loan forgiveness, in his address on Monday night to the nation at a time when millions of Americans are in financial distress because of the pandemic and job losses, was blunt about what he intends to do about it. He also laid out a series of promises for jobs and prosperity including lowering interest rates and providing more relief for those struggling with debt as well as an economic plan that would provide $3 trillion over 10 years.
He promised “on day one”, there would be widespread testing and vaccinations. We should begin by giving financial relief to individuals and families struggling through all this pain. The new administration and Congress can help make that happen. Here’s a look at how.
Student Debt Relief : Biden Students Loan Forgiveness
President-elect Biden pledged during his address to the General Debate in which he called on Congress to immediately approve a bipartisan package that includes provisions to increase direct student loan forgiveness for more than 6 million borrowers who may have trouble paying back their loans or who get them late.
According to Democrats, he is also calling for debt forgiveness to be paid interest or deferred when borrowers resume making payments (as happened to those who were in forbearance) so they can pay the full amount in order to avoid defaulting again. Biden has made clear this will require congressional action on the part of President Donald Trump but it looks like Republicans would not be ready, at least for now.
It’s important though, even if the president doesn’t want to put the blame squarely on him, that the president be willing to pass legislation and stand by it.
Tax Reform for Student Loan Forgiveness
Joe Biden said during his speech that he would call for significant tax reform, saying his priority was to lower the corporate tax rate to 28 percent from 35 percent and double the federal minimum wage. That would make it easier for businesses as well as individuals, and that would lead to much bigger revenues for both government programs for health care and higher education for children.
His big focus on taxes, however, isn’t just the elimination of the current 39 percent top bracket for corporations and the 27 percent, the first item on Biden’s agenda. Biden said he wanted to lower the value of small businesses and pass a law reversing the current estate tax break for large houses.
Also on his wish list is passing tax cuts for businesses and raising the federal tax on capital gains. He’ll probably push for them in the upcoming Senate Democratic Caucus meeting after being sworn in as vice president.
What Biden Will Do About Student Loans Payday Accounts
He’s also spoken about cancelling the student debt limit in several ways. One of the proposals that he made was increasing the debt ceiling so it might be raised over the next year. After a huge spike in delinquencies in August, the U.S. Department of Education estimated it owed more than 1.5 million borrowers about $1.1 trillion.
Another thing Biden wants to do is raise the interest rates on federal student loans so they’re no longer under federal regulation. The higher interest rates will allow consumers to hold on to loans for longer due to the potential cost savings from saving those funds instead of having them taken out.
That could help spur growth on private colleges with their fees and tuition models. However, Biden will likely not raise rates very quickly. There still aren’t any major legislative wins yet in Washington for a permanent hiking the caps.
Although the idea was floated before, it doesn’t appear anything will get done unless one party or another holds the chamber.