WASHINGTON

- US President Joe Biden's announcement of a plan to cancel $10,000 in education loan debt for low- and middle-income students, as well as write off a similar number of Bill Grant grant debts for children of low-income families, has caused a deepening political storm. From the size of the wide political division among Americans.

Democrats argued that 20 million Americans would no longer have to pay their education loan payments in full, while 23 million would be very comfortable with a significant reduction in their remaining loan payments.

On the contrary, the Republicans considered that this step supports university degree holders who have jobs that pay high salaries and wages, and that this step will increase inflation that hits the American economy hard.

My mom didn't go to college.

She worked two jobs to keep the lights on & provide for my brother & me.

President Biden wants Frances Scott & millions of other Americans to pick up the student loan bill for the wealthiest among us who carry the majority of the debt.

That's wrong.

— Tim Scott (@SenatorTimScott) August 24, 2022

wide split

Tom Scott, the black Republican senator from South Carolina, criticized Biden's move.

He tweeted, "My mom didn't go to college, but she worked two jobs to support me and my brother and ensure us a decent life. Now President Biden wants my mother, Francis Scott, and millions of other Americans, to foot the bill for the student loans that college gives them a chance at career success." ! This is a mistake".

In contrast, Elizabeth Warren, a Democratic senator from Massachusetts, welcomed Biden's decision as an important step in raising the burden of debt payments to the middle class.

"President Biden's plan to cancel student debt will help the middle class directly," Warren said. "99.7% of student borrowers are not graduates of prestigious universities, and 42% of them studied in middle schools. President Biden is fighting for hard-working Americans."

While some commentators have gone on to accuse Biden of taking this step to achieve electoral gains for his Democratic Party by offering "this bribe 8 weeks before the elections" in an attempt to get millions to vote for Democrats in the mid-term congressional elections on November 3 next.

4298 university institutions are located in the United States, including 1626 public universities, 1687 private non-profit universities, and 985 for-profit universities (Reuters)

Can debt cancellation solve the high cost of education?

The federal government does not operate any US college or university. Instead, the 50 state governments have the authority to operate and fund public colleges and universities within state boundaries.

While the federal government (through the 50 state governments) provides free education to all Americans and residents of the United States until the end of high school, students bear the cost of their college education.

The federal government provides low-interest loans to support students whose families, or themselves, cannot afford their college education.

Students are exempted from paying the loan until they get a job after graduation.

Because of the high value of university education, the value of loans rises, and therefore the process of paying educational loans continues for many years, especially with payment facilities that give some borrowers a period of 30 years in some cases to repay the debt.

The average cost of US college tuition is among the highest in the world, and the average cost of an academic year at public universities was $9,400 last year.

While this average rises to $37,600 at private non-profit universities, the cost is $18,200 at private for-profit universities.

According to US News & World Report, there are 4,298 university institutions in the United States, including 1,626 public universities, 1,687 private non-profit universities, and 985 for-profit universities.

There are 14 private universities among the top 20 US universities, including Harvard, Stanford and Yale.

The University of Michigan, Ohio University, and the University of California are among the top public universities.

Some commentators complain that loan forgiveness does not address the larger problem of rising college education costs.

For years, the cost of college education has risen much faster than inflation, which is one reason why the value of student debt has exploded.

Some believe that the government may encourage students in the future to take on more debt in the hope of canceling it in the future.

They add that debt cancellation will push universities to raise tuition fees, especially since there is an old rule in economics that when the government subsidizes something, you tend to get more of it, and this includes higher tuition fees and university education debt.

President Biden's plan to cancel a student debt will directly help the middle class.

99.7% of student borrowers are not Ivy League graduates.

42% do not even have a four-year degree.@POTUS is fighting for hard working Americans.

https://t.co/WMohH6a2MM

— Elizabeth Warren (@SenWarren) August 26, 2022

Do educational loans encourage or limit university studies?

Nearly 38% of Americans hold college degrees, and nearly 19.5 million Americans are currently studying at universities, according to the Institute of Higher Education.

60% of American students study in public universities, and the remaining 40% are distributed to private universities and middle schools.

Data from the Ministry of Labor indicate that the average income of university degree holders is 84% ​​higher than the average income of only high school certificate holders or less.

The income gap between college graduates and others continues to grow over the course of their careers.

In 2021, fresh graduates averaged $52,000 per year for bachelor's degree holders when they turned 25, and for high school graduates of the same age, the median income was just $30,000 per year.

The White House estimates that 90% of the debt relief will go to people who earn less than $75,000 a year.

Low-income borrowers who qualified for Pell Scholarships in college qualify for twice the debt relief than other borrowers.

Individuals earning up to $125,000 a year, or a family earning $250,000 a year, will not be eligible for these exemptions.

Biden's plan will cancel $10,000 of education loan debt for low- and middle-income students (Shutterstock)

The dilemma of justice, raising living standards and the specter of inflation

Under Biden's plan, 43 million people's loan payments are expected to be reduced, while 20 million of their debts will be forgiven completely.

Some reports have estimated the cost of the move at close to $600 billion.

The cut will allow these students to have more money to spend elsewhere, perhaps to buy a car, put down a down payment on a house, or even put the money aside and invest it, so debt forgiveness could raise the standard of living for tens of millions of people.

However, critics say the extra purchasing power would add to the inflation that is already killing American consumers.

Inflation remains at its highest rate in 40 years, and the Federal Reserve is moving aggressively to raise interest rates in hopes of restoring price control.

Also, this step would make the taxpayers bear this cost instead of those who borrowed these funds.

Many believe that this transfer effectively penalizes people who have saved up to pay for their college education, when the majority of Americans do not go to college, but will have to contribute to the costs of those who attended college.

There is anger among blue-collar workers, professionals, and others who see it as unfair to help pay for the debt burden of doctors, lawyers, engineers and other graduates who earn very high wages.