The majority of federal student loan holders would be qualified for loan forgiveness, according to an announcement made by the White House in August. The majority of borrowers who were not awarded a Pell Grant would be qualified for loan forgiveness of up to $10,000, while debtors who eventually received a Pell Grant, which is a form of financial aid for undergraduate students from low-income families, would be eligible for loan forgiveness of up to $20,000 if they qualify.
Last week, in what was described by NPR as a dramatic reversal, the United States Department of Education quietly modified its instructions regarding who qualifies for student debt forgiveness in accordance with President Biden's contentious executive order.
According to NPR, the new policy could have an impact on as many as 1.5 million borrowers, and it is unclear why the government modified its previous position.
While the Department of Education has remained silent on the matter, National Review speculates that the move was made in an effort to bolster the validity of President Joe Biden's executive order, which is currently being challenged in court by the attorneys general of Iowa, Kansas, Nebraska, Missouri, South Carolina, and Arkansas.
The Pacific Legal Foundation has also initiated legal action, arguing that student-loan debtors in states including Indiana, Wisconsin, Minnesota, Arkansas, and North Carolina would've been unjustly taxed for the student-loan 'forgiveness' under President Joe Biden's policy.
Lawrence Summers, an economist who worked in the administrations of both Bill Clinton and Barack Obama, made it quite obvious that the order that Biden issued would have ramifications for inflation.
According to Summers's line of reasoning, student loan debt reduction is spending that promotes demand and creates inflation. It uses up resources that may be put to better use supporting people who, for whatever reason, did not have the opportunity to go to college. Additionally, it will tend to contribute to inflation by driving up tuition costs.
His remark that forgiveness would lead tuition prices to rise is absolutely dead on, despite the fact that many people will argue out that the government shouldn't be "helping" individuals who didn't attend college any more than those who did attend college.
The preceding is a summary of an article that originally appeared on Headline Wealth.