United States. Biden partly wipes the slate clean from students
At the end of a less disastrous summer than expected for the President of the United States, with a slightly higher popularity rating (40.6%), Joe Biden is applying one of his campaign promises. Two and a half months before the midterm elections, the American leader has decided to relieve some 20 million students, according to White House estimates, of part of their debt.
The measure was eagerly awaited in a country where going to university and obtaining a diploma represents a financial risk that can cost up to tens of thousands of dollars.
A measure on an unprecedented scale
Concretely, the president draws a line under 10,000 to 20,000 dollars (20,000 euros), depending on the situation, for those whose income is less than 125,000 dollars per year, and approximately double for couples. The decision concerns the most modest people, bound by federal loans, excluding those contracted with private banks.
A measure of unprecedented magnitude. The reductions were previously applicable only to student debts taken out with establishments which have not respected their educational commitments, on courses or opportunities, or which have gone bankrupt. “As per my campaign promise, my administration is announcing a plan to give working-class and middle-class families a break as they prepare to resume federal student loan repayments in January 2023.”explained Joe Biden in a tweet.
The President of the United States also extends the moratorium on the repayment of federal student loans for » one last time « until the end of 2022. This postponement had been put in place under Donald Trump during the Covid and systematically renewed.
A political coup as the midterms approach
For Republicans, these devices are a bitter pill. They immediately denounced a political initiative and raised the specter of inflation. Republican National Committee Chair Ronna McDaniel saw it as unfair punishment for “Americans who saved money or chose different careers”.
Joe Biden has unsheathed his arguments. He recalls the vote on the tax cut of 2,000 billion dollars “which mainly benefited the wealthiest Americans and the biggest corporations, which slowed the economy and did little for growth, which was unfunded and which inflated a huge deficit” .
In his camp, senators Chuck Schumer and Elizabeth Warren saluted “a giant step towards resolving the student debt crisis”. On the side of the left wing of the Democratic Party, we defended a total erasure of the 1,400 billion dollars of federal debt or, at least, 50,000 dollars per household. Above all, it feeds the hope of free education for at least the first two years. . Joe Biden did not dare to take this step. He preferred to limit himself to relief for students from low-income families.
American universities sell their teaching for between 10,000 and 70,000 dollars a year. Unless they were born with a silver spoon, most students are forced into debt. The figures are impressive: in 2019, they were around 45 million to accumulate 1,600 billion in debt to pay for higher education. The amount increases over the years to the point of exceeding the sums due under credit cards which represent approximately 1,000 billion.
Upon leaving university with a degree in hand, each borrower owes an average of $32,000, a constantly rising sum. Defaults have exploded during the health crisis, as is the case with every economic downturn. Even when everything is going well, the burden of debt is a brake, the borrower generally drags this burden throughout his life. Many seniors who can no longer repay are punctured on their retirement, when they have one. They cannot come to the aid of their children who have followed the same route.
The Biden measure is a small revolution. It opens a very small door towards an upheaval in the financial conditions of access to universities. In the meantime, selection by money, for education as for health, remains at the heart of the American system.