US President Biden last year became the first president ever to abolish part of the student debt. What could have been a historic decision has now been put on hold.
In the summer of 2022, the US White House announced a historic decision. At the national level, hundreds of thousands of dollars in student loans would be waived.
That decision came at a time when the country was hit by strong inflation, as a result of the corona crisis and the energy crisis caused by the war in Ukraine. It was also one of President Biden’s central election promises.
History
Since 1965, Americans have been able to finance their education thanks to a loan. In that year, the Federal Family Education Loan Program came into effect, allowing students to take out private student loans that the government supported or funded. Since then, there have been countless students with such a loan.
That program ran until 2010, when 92% of loans were nationalized under Obamacare. Since then, almost all student loans have been held by the government, and the national debt has also more than doubled: from $ 811 billion in 2010 to $ 1.7 trillion in 2022.
In 2022, 42.8 million Americans had student loans at an average of $ 30,000 per person. That amounts to 13% of the population. In 2023, Biden now wants to waive $ 10,000 to $ 20,000 of that loan per person.
For 20 million people, the debt would even be completely forgiven. These are US citizens who earn less than $ 125,000 annually, so that the administration is sure that only they really need help.
In addition, Biden also promised that he wants to reform the organization responsible for debt cancellations, because about 95% of applications are currently denied. In concrete terms, this means that the rules will be relaxed and Americans will have easier access to financial assistance with their study-related loan.
Such promises and measures are milestones in American history. In a country where capitalism prevails, culture mainly celebrates the “self-made man” and socialism is a swear word, these types of initiatives should not be underestimated. Because although a student loan can theoretically be understood as financial aid, it is often a financial trap.
Higher education in the United States can cost tens of thousands of dollars. It is an education system that has been around for decades and is financially secure for many young people. Those who take out such a loan often take decades to repay them. And that doesn’t just have to do with the amount, sometimes more than $ 100,000, of that loan.
