US President Joe Biden is examining whether he can use a presidential decree to eliminate debt that Americans have taken on for their university education.

Biden is apparently considering a cap: Anyone earning less than $125,000 a year should at least have some debt forgiven, said White House spokeswoman Jen Psaki.

The debts of current and former students total around $1.75 trillion.

Slightly more than half of all students leave the university with debts, in most cases the creditor is the federal government.

Winand von Petersdorff-Campen

Economic correspondent in Washington.

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Biden is feeling increasing pressure ahead of this year's midterm elections as his approval ratings among younger voters have plummeted, according to polls from NPR/Marist, Harvard's Institute of Politics and Gallup.

Depending on the survey, the values ​​slipped between 16 and 21 percentage points.

Only 37 to 41 percent of this group of voters, which is central to Democrats, see Biden positively.

One of the most important topics of this group: the elimination of student loans.

Left-wing Democrats like Bernie Sanders and Elizabeth Warren have been pushing the Biden government for comprehensive debt relief for some time.

But there is no majority in the Senate.

The option to issue a decree by presidential decree is obviously legally complicated.

During the pandemic, the president decreed as an emergency measure that students do not have to service their student debt.

The Federal Reserve Bank of New York estimates that nearly $200 billion in payments were missed over the roughly two-year period.

Whether a new, more far-reaching decree is still legally justified is uncertain.

Another challenge for Biden is a dispute among leftists about who debt relief actually helps.

Economists close to Warren and Sanders argue that the high level of debt is preventing graduates from buying houses, cars and other consumer durables, with corresponding consequences for aggregate demand.

The rich would benefit most from debt relief

In contrast, the think tank Brookings, which is politically more to the left of center, published a large study in January with a clear result: The cancellation of student debt primarily benefits the rich.

The central argument is that debt is not just debt.

The typically six-figure debts of medical school graduates are paid off quickly because doctors earn well.

If you take into account the human capital built up during your studies, the study quickly shows that debt relief primarily benefits the rich - measured in terms of assets, but also in terms of income.

Another political problem arises from the fact that many Americans have dutifully paid off their student debt and may therefore view debt relief as unjustified special treatment for important constituencies.

One group in particular could react angrily: Around half a million Americans did not take advantage of the debt moratorium during the pandemic crisis, but continued to pay off the loan.

Some have even used the phase to pay off the debt completely.

Many Americans were able to build up savings and pay off loans thanks to large transfers from the state and a lack of opportunities to consume.