Biden forgives millions of student loans

The US government will forgive $10,000 student loans for millions of former college students in debt, President Joe Biden said on Wednesday, keeping a promise he made in his 2020 campaign for the White House.

The move could boost support for fellow Democrats in November's congressional elections, but some economists say it could fuel inflation, while some Republicans in the US Congress have questioned whether the President has the legal authority to cancel the debt. Debt forgiveness would free up hundreds of billions of dollars for new consumer spending that could target home purchases and other big-ticket items, economists said, adding a new wrinkle to the country's fight against inflation. These actions are "for families who need it most - for working and middle-class people who have been hit particularly hard during the pandemic," Biden said at the White House. Addressing a key criticism of the plan, Biden promised that no high-income households would benefit. "I will never apologize for helping working Americans and the middle class, especially from the same people who voted for a $2 trillion tax cut that mainly benefited the wealthiest Americans and the largest corporations," Biden said, referring to the Republican tax cut passed under former President Donald Trump. Borrower balances have been frozen since the start of the COVID-19 pandemic, and payments are not due on most federal student loans since March 2020. Many Democrats had pushed for Biden to forgive up to $50,000 per borrower. Republicans, on the other hand, mostly opposed student loan forgiveness, saying it was unfair because it would disproportionately help high-income people. "President Biden's student loan socialism is a slap in the face to every family who sacrificed for college, every graduate who paid off debt, and every American who chose a particular career path to avoid debt or volunteered to serve in our Armed Forces," Senate Minority Leader Mitch McConnell said Wednesday. White House domestic policy adviser Susan Rice told reporters that the administration has not yet set the price tag for the package, which will depend on how many people apply. Rice said student loans taken out after June 30 this year are not eligible.