US President Joe Biden announced that the US government will provide forgiveness of about $10,000 in student loans to millions of debt-burdened former college students, fulfilling a pledge he made while running for president in 2020.

Reuters said the move could boost the blood of Democrats in the midterm elections next November, but some economists warn it could spark inflation, and some Republicans in Congress have questioned whether the president has the legal authority to cancel the debt.    

Debt forgiveness would free up hundreds of billions of dollars in new consumer spending that could target expensive home purchases and other expenses, according to economists, who said this would add difficulty in the United States’ fight against inflation.


Biden said, in statements to the White House, that these measures are for families who desperately need them from the middle and working classes who were most affected during the Corona epidemic. He pledged not to benefit high-income families, something that has been a major criticism of the plan.    

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Biden continued, saying: I will never apologize for helping working Americans and the middle class, especially not to the same people who voted for a two trillion dollar tax cut, which mainly benefited the wealthiest Americans and big companies, speaking of Republicans passing a tax cut under former President Donald Trump. .    

Debt payments have been frozen since the start of the coronavirus outbreak, with no payments required on most federal student loans since March 2020, and many Democrats have sought forgiveness of $50,000 per borrower. Most Republicans opposed student loan forgiveness, calling them unfair because they disproportionately help people with higher incomes.

The measure affects people who earn less than $125,000 annually. The decision includes writing off $10,000 for people who did not benefit from a federal grant to pay the costs related to their university studies, and $20,000 for those who received a grant when they were most in need.

Reuters quoted a senior official in the US administration as saying that the decision to partially cancel student debts will benefit about 43 million student borrowers.

In a joint statement, Democratic Senators Chuck Schumer and Elizabeth Warren hailed a “colossal step toward resolving the student debt crisis.”

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Youth Support

For its part, Republican Rona McDaniel said that this measure “unfairly punishes Americans who save for college studies, or choose a different career path.”

Before the decision was announced, Reuters said the move could restore dwindling support from young voters who backed Biden in the 2020 presidential election.

American consumers are incurring a huge $1.75 trillion in student loan debt, much of it owned by the federal government, as a result of private and state-subsidized college tuition, which is much higher than in most other rich countries.

The administration also extended the suspension of student loan payments until the end of the year, after the temporary government pause for student loans and pandemic-related payments was scheduled to end at the end of August.

Borrower balances have been frozen since the start of the coronavirus outbreak, with no payments required on most federal student loans since March 2020.

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Britain.. study loans worthless as inflation rises and students turn to food banks

Recent studies have indicated that UK students will look for additional jobs and visit food banks in the next academic year; The value of loans and grants has been eroded by soaring inflation. A survey of 1,500 students by job site PreCrome shows that a fifth of students will have to work two jobs when universities reopen in September.

The dependency loans that students can apply for from the government will be the lowest in real terms in seven years, according to the Institute for Tax Studies, with a spokesperson for the National Student Union referring to “students who work multiple jobs to make ends meet, and who can’t afford the costs.” Traveling to their university library, cutting costs of cooking food; Because of rising energy costs,” he said, adding that research had shown that thousands of students depended on food banks and “buy now, pay later” loans.

Students have always had to save, but the current boom in inflation is hitting them especially hard because student loans are flat, the cost of living is constantly rising, and most students won’t make up for the wage increases demanded by people who work full time.

Undergraduate students in England can apply for a loan to cover living expenses which is based on family income and whether they plan to live at home during their studies. US dollars), which is about £1,000 less than the minimum cost of living in the city, according to a recent Bloomberg article. And costs continue to rise for those attending university outside the capital, where inflation-influenced rent and food costs make up the bulk of student spending.

Students also face higher interest payments on their loans upon graduation, although they don’t have to start paying off the debt until they earn more than £27,295 a year.

The government recently stated that it would set the interest on loan repayments at 6.3%, while a spokesperson for the Ministry of Education stated that the government “has continued to increase cost-of-living subsidies on an annual basis for students from low-income families since the start of the pandemic, where they can now access significant amounts of cash.” ».

But there are clear signs that rising costs are changing behaviour, with the education charity UCAS reporting a decrease in the distances students plan to travel to enroll in higher education programmes, suggesting that many are choosing to stay at home. Claire Marchant, the association’s director, expressed concern that many students would choose not to enroll in higher education at all.

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Biden announces write-off of student loans

“As I promised during my campaign, my administration is announcing a plan to ease burdens on poor and middle class families as it prepares to resume repaying federal student loans in January 2023,” he said in a tweet.     
He promised to publish details later.     
The measure affects people who earn less than $125,000 a year, according to an explanation attached to the president’s tweet.     
It would be a question of writing off $10,000 for people who did not receive a federal grant to pay for their college tuition and $20,000 for those who received a grant when they were most in need.     
In a joint statement, Democratic Senators Chuck Schumer and Elizabeth Warren hailed a “colossal step toward resolving the student debt crisis.”     
For her part, Republican Party leader Rona McDaniel said that this measure “unfairly punishes Americans who save for college or choose a different career path.”

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A Bitcoin advocate presents an idea that includes Bitcoin as a solution to student loan problems in America

In the wake of US President Joe Biden’s announcement of a student loan forgiveness scheme aimed at canceling debts of up to $20,000 for millions of Americans, a Bitcoin (BTC) proponent has proposed an alternative way to repay the loans.

Dennis Porter, CEO of a non-profit organization called Satoshi Action, tweeted that there was another way for the US government to solve the student loan issue. According to Porter, Biden could give each debtor some $10,000 worth of bitcoins and lock them into a 10-year smart contract. The nonprofit executive explained that the contract is supposed to be enough to pay off the remaining balance once it’s issued.

Community members criticized Porter’s mention of a smart contract as some believe that the Bitcoin network cannot support it. One Twitter user responded to Porter, calling it “clumping random things together”, while another said Bitcoin isn’t the answer to everything.

In response to the Twitter thread, fintech executive John Wingate told Porter that it can’t be done with just Bitcoin. Wingate also asked Porter if this is his admission that Bitcoin needs to expand its use cases. Despite criticism regarding the compatibility of smart contracts with Bitcoin, Porter supported his proposal and defended his position. The executive also shared a link to a guide that shows a method on how smart contracts can be used to lock down Bitcoin for a period of time: