President Joe Biden officially announced details about how his administration plans to reallocate student loan payments from America's rich and college educated to the working class.
"During the campaign, he promised to provide student debt relief. Today, the Biden Administration is following through on that promise," the White House released Wednesday.
Here are the details contained in a White House "fact sheet" on the move:
The Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 ($250,000 for married couples).
The Department of Education will provide up to $20,000 in loan relief to borrowers with loans held by the Department of Education whose individual income is less than $125,000 ($250,000 for married couples.
Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with original loan balances of $12,000 or less.
Cover the borrower’s unpaid monthly interest.
For undergraduate loans, cut in half the amount that borrowers have to pay each month.
The move is being blasted as a scam by Republican lawmakers and top Democratic economist Larry Summers, who worked for President Barack Obama, warns it will cause even more inflation.
I hope the Administration does not contribute to inflation macro economically by offering unreasonably generous student loan relief or micro economically by encouraging college tuition increases.
— Lawrence H. Summers (@LHSummers) August 22, 2022
Earlier this year, House Speaker Nancy Pelosi admitted Biden doesn't have the authority to reallocate debt.
Pelosi in April:
— Townhall.com (@townhallcom) August 24, 2022
“People think that the President of the United States has the power for debt forgiveness. He does not.” pic.twitter.com/9ZBwlSTbOj