President Joe Biden said the US government will forgive $ 10,000 (£ 8,475) in student loans for graduates.
The White House said “the country’s skyrocketing cumulative federal student loan debt – $ 1.6 trillion and rising for over 45 million borrowers – is a significant burden on the American middle class.”
Many Democrats had pushed as much as $ 50,000 (£ 42,309) per borrower, but still cheered the move as the party looks to November’s mid-term elections.
“Earning a college degree or certificate should give every person in America an edge in securing a bright future,” said Education Secretary Miguel Cardona.
“But for too many people, student loan debt has hindered their ability to fulfill their dreams, including buying a home, starting a business or supporting their family.”
Debt cancellation will free up hundreds of billions of dollars for new consumer spending that could be aimed at buying homes, according to economists who said this would add a new wrinkle to the country’s fight against inflation.
Republicans, seeking to regain control of Congress in November, oppose the move, arguing that it is unfair because it will disproportionately help people earn higher incomes.
“President Biden’s student loan socialism is a slap in the face to every family that has sacrificed to save for college, every
graduate who has paid their debt and every American who has chosen a certain career path or volunteered to serve in our military to avoid getting into debt, ”Senate Minority Leader Mitch McConnell said.