Senator Elizabeth Warren, who has lobbied hard for President Joe Biden to forgive a debt of $50,000 per borrower, said his much smaller plan could still address racial inequality between rich and poor. race and gender and help curb inflation.
“I certainly argued to learn more, and I think we can do more,” Warren said in an interview Friday. “But it’s important to stop and celebrate this historic moment.”
The Massachusetts Democrat said she, Majority Leader Chuck Schumer and Senator Raphael Warnock met with Biden multiple times to push him for student loan forgiveness. All three of them supported the $50,000 figure.
Warren spoke to Biden directly about the issue even before he took office, according to a person familiar with the discussions. She’s also made dozens of calls with White House staff and education and advocacy officials in recent months to get a larger number of pardons available to target groups, including recipients. Pell subsidy.
Biden announced his student debt relief package Wednesday after months of deliberation. Under the plan, Pell grant recipients with unpaid federal student loans will be forgiven up to $20,000 and other borrowers will be written off up to $10,000. There is an income limit of $125,000 for qualified individuals and $250,000 for married couples.
Biden also extended the moratorium on federal student loan repayments through December 31 and proposed a new income-based repayment plan that would limit monthly payments to 5% of a person’s discretionary income. borrower.
Federal loans account for $1.6 trillion in student debt in the US, and 43 million borrowers could benefit from Biden’s plan.
Critics of Biden’s plan, including some policy experts, have raised concerns that canceling student debt will fuel inflation, which is growing at the fastest pace in four years. decade.
Senate Republican Leader Mitch McConnell said in a statement Wednesday that the debt forgiveness would add to inflation and be “a slap in the face to every family that has sacrificed to save for college, every graduate pays off a debt and every American who has chosen a certain career or volunteered to serve in our Armed Forces to avoid going into debt. ”
However, Goldman Sachs Economists in a report said they expect any impact on inflation from the plan to be small. And middle-income households will benefit the most from debt forgiveness.
Warren said repaying the loans next year would counter the inflationary effects.
“The President has linked the cancellation to the restart of loan payments,” she said. “So 23 million Americans will pay an average of about $400 a month on their student loan debt. That takes money out of the economy and helps calm inflation.”
Warren and other progressives, including Representative Ayanna Pressley, have been consistent in calling for Biden to forgive student debt of at least $50,000 per borrower. The Black Congressional caucus has also prompted the White House to demand a higher level of forgiveness.
Warren said a $50,000 debt forgiveness would do the most to help close racial and gender gaps between rich and poor, but Biden’s plan would still help tackle inequality.
More than 50% of black borrowers report less net worth than they have in student debt and are the group most likely to experience financial hardship due to student debt, according to the study. Education Data Initiative. On average, black college graduates have $25,000 more in student debt than white college graduates.
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