Americans are racking up thousands of dollars in student loans

The White House recently announced that. According to the Biden administration, student debt is a “significant burden on the American middle class.” More than 45 million Americans have a total of $1.6 trillion in debt. The same amount was converted into euros.

‘Decision is unfair’

A visionary project leads to various reactions. On the one hand, people are disappointed that more money has not been waived in these tough financial times. But on the other hand, Americans who have done everything they can to pay off their debt find the decision unfair.

Still, Biden is carrying out his decision, which is in line with his campaign promise to make major reforms to the U.S. student loan system. He calls it ‘breathing room for middle-class workers and families.’

The US government had already taken a break on student loan repayments to deal with Americans during the coronavirus crisis. Biden announced that the hiatus will now extend through the end of the year.

Also, Americans only have to pay back a small portion of their monthly income and poor Americans don’t have to pay anything back. After ten years of repayment, up to $12,000 in debt is fully forgiven.

This results in higher costs

And some Americans are forgiving part of their debt. The government hopes the move will reduce hundreds of billions of dollars in outstanding debt and boost consumer spending. For example, many Americans are now putting off buying a home because of their debt burden.

The Biden administration doesn’t think some student loan relief will boost inflation, as Republican opponents argue. Consumer prices may also come down somewhat. These indicate that payments will resume at the same time that part of the loan is canceled. As a result, there won’t suddenly be more money in the economy, but especially less wealthy Americans will benefit.