MACON, Ga. — President Joe Biden announced Wednesday he's planning to cancel federal student loan debt for most borrowers. With this decision, millions of borrowers may be eligible for debt relief.
"So take your student loans, wipe out $10,000 for borrowers who make less than $125,000 a year,” Mercer Professor Antonio Saravia explained.
Those who went to college on a Pell Grant could see double the relief.
"The amount of forgiveness will be greater than $10,000, will actually go up to $20,000,” he continued.
The plan from the Biden administration will also set your payments based on income.
Saravia is an economics professor at Mercer University and says while some celebrate the cancellation, it comes with a price tag.
"How much is this going to cost us? And I say 'cost us' because, of course, this is the taxpayer at the end of the day that is going to have to pay for this. It’s going to cost us about $300 billion," he explained.
Saravia believes the price tag is just one of several concerns.
"I think this is problematic -- it sends the wrong message. It’s going to cost us money, it’s going to create a deficit, and I think it’s immoral. We make people who didn't go to college to pay for those who did," Saravia said.
Some may even agree with the professor that the trillion-dollar debt erasure enables problematic behavior.
"It’s like, 'Don't worry, you get a loan to study, to move your life project forward and when it comes time to pay, if there's enough social pressure, the government is going to cancel that debt,'” he said.
He says that social pressure could trickle into other capacities.
"If we put enough social pressure, then the next time, we're going to say forget the loans of people who got credit to buy appliances. Why? I don't know, because we believe appliances are important in the household," he explained.
For those who will benefit, Saravia wants you to keep in mind cancellation comes with a cost.
The president says he will extend the student loan pause one final time through December 31. Then payments on federal student loans will resume in 2023.