(NewsNation) — President Joe Biden is expected to announce a plan Wednesday that will forgive at least $10,000 in student loan debt for people who make less than $125,000 annually.
While $10,000 in loan forgiveness per qualifying person is a big number, according to Forbes, the average student leaves college with nearly $29,000 in debt. This effort isn’t likely to wipe the slate clean for most people.
According to an analysis done by the Wharton School of Business at the University of Pennsylvania, forgiving $10,000 per borrower in student loans will cost around $300 billion, which will add to the federal deficit. However, that entire cost is only about one percent of the overall 2021 deficit.
Student loans have been a moneymaker for both the government and private industry for the better part of three decades now.
Federal student loans were first introduced in 1958 as part of the space race in order to help the U.S. compete with the Soviet Union when it came to science and math.
But it wasn’t until the early ’90s that students were on the hook for interest charges, rather than the government. This also became the first time the government could lend directly to borrowers.
Since then, outstanding student loan debt began to soar to the nearly $2 trillion it is now.
According to U.S. News and World Report, $10,000 is just about the average cost of one year of in-state, public school tuition. But that doesn’t even include the cost of books or room and board, just the class credit hours.
The $10,000 in loan forgiveness doesn’t even cover one semester of out-of-state tuition, and barely touches one-quarter of private school.
More than half of all current students at private and public colleges currently carry student debt, and it gets worse when you look at alumni in their 30s and 40s.
According to the government’s own federal student aid data, more than 29 million Americans between the ages of 25 and 49 continue to carry student loan debt long after they’ve graduated.