As wages fail to keep up with inflation, credit card debt surges, Biden considers student loan forgiveness


Quarterly report from the Federal Reserve Bank of New York Questions about household debt and credit have come out, and they don’t look good. Overall, credit card debt soared 13% in the second quarter, the largest increase since 1999.

What’s causing Americans’ credit card debt to rise? The answer seems obvious – rising costs and inflation, plus wages not keeping up.

When faced with an unending increase in household necessities like gas, groceries and utilities, many American households turn to credit cards to bridge the gap between wages and costs. To fully understand this growth, let’s take a closer look at the Fed’s report.

RELATED: Biden on how long Americans can expect to pay high gas prices — ‘as long as they need to’

numbers continue to rise

quarterly report It shows that total U.S. household debt is now $16.15 trillion, up a staggering $312 billion from last year. The increase in household debt includes mortgages, auto loans and credit card balances.

Here’s a breakdown of each:

  • Mortgage balances rose by $207 billion to $11.39 trillion
  • Auto loans up $33 billion to $199 billion
  • Credit card balances increased by $46 billion

Those most affected are those in the lower income bracket. Joel Sculley Instructions for the Microeconomic Data Center:

“While household balance sheets generally appear to be in a strong position, we are seeing rising delinquency rates for subprime and low-income borrowers…”

So why increase borrowing? Nod to Democratic strategist James Cavill, “It’s the economy, stupid!”

unbalanced

New York Fed state:

“Americans are borrowing more, but a large part of the increase in borrowing is due to higher prices.”

So far, Americans have struggled with gas costs above $5 a gallon and record inflation of 9.1%. But while a Biden administration likes to tout increases in average hourly earnings, the numbers don’t add up.

Average hourly earnings rose 5.1%. This is a 4% deficit due to inflation. So we see why Americans have to rely more and more on their borrowing power.

in a report personal capital, 56% of consumers say their standard of living has declined, and 69% feel their incomes are not keeping pace with inflation. Americans say they think they need to make $107,800 a year to feel financially healthy, double the national average.

This feeling of financial unease has many Americans focused on small wins.As a Certified Financial Planner Paul Deer Say:

“People are prioritizing easy jobs and lowering their expectations.”

Who can blame them when lowering expectations seems to be our new motto? However, one balance that did not see an increase was student loans, which remained relatively unchanged.

That’s interesting as a Biden administration prepares to issue a seventh moratorium on student loan debt and may increase the announcement on overall student loan forgiveness.

But who does it really help?

RELATED: Sen. Joe Manchin vows ‘Reducing Inflation Act’ won’t raise taxes on Americans despite all signs it will

Forgive debt and minimize personal liability

Wall Street Journal The Department of Education has instructed loan servicers not to issue statements, the report said. That suggests at least one more extension of student loan payments.

However, there are many rumors that a more important announcement from the White House is on the horizon.

The president has been considering the idea of ​​forgiveness $10,000 in student debt Available to anyone earning less than $125,000 a year. However, some more to the left than President Biden say that’s not enough.

Progressives and civil rights groups are pushing $50,000 in student debt relief, and some even advocate no income cap. For example, the NAACP sent a letter to the president stating that black borrowers:

“…In today’s unfair economy, there are few realistic ways to pay it back.”

Certainly not that attitude. The argument for student loan forgiveness is that borrowers are blinded by higher education and the government to take out these loans and then not have enough wages to pay them back.

Not everyone supported this possible decision, and many wondered why debt-paying taxpayers should be forced to pay off other people’s debts.

it’s called an adult

Republican Senator Ben Sass The man from Nebraska perfectly countered:

“Student loan forgiveness is regressive — it writes off the debt of wealthy kids who would otherwise be fine. It’s a big punch for every kid who goes through college to pay tuition or struggle to pay off their loans.”

I totally agree. My parents couldn’t pay for my college. Not because they are financially irresponsible, college was and is very expensive.

So instead of taking out student loans and getting a degree, I enlisted in the military. My services paid for my undergraduate and graduate degrees.

Anyone who wants to say I get higher education for free can look up at me and say it in person.

Working 12 hours a day, after becoming a mom, I spent many nights reading textbooks, writing papers, and preparing for exams. I also study overnight in a tent, at risk of being shot or blown up around the corner.

While I know not everyone can join the military, my point is that as an adult you need to make adult decisions and work hard for what you want.

What if those who choose to take out student loans can’t repay their loans, and what if these households are left with credit card debt due to inflation?

Where is their debt forgiveness?

RELATED: Biden Treasury Yellen says economy is in new phase of ‘recovery’

Is it worth it?

At this point, it’s easy to make arguments that college might not be worth it.Based on average costs in 2020 National Center for Education Statistics$25,700 for an undergraduate living on campus for one year.

In private institutions, this cost rises to $54,500 per year. Tuition fees at public universities have risen by 10% and 20%, respectively, over the past decade.

As more colleges offer online instruction, the military is hurting recruits, and more industries value certificates over degrees, a real question is whether the old path from home to higher education will continue.

With this generation of parents relying on credit cards to make ends meet, let’s hope that their children either have a drop in tuition fees or a development in their post-high school education.

Now is the time to support and share your trusted resources.
Political Insider ranked third Feedspot “100 Best Political Blogs and Websites.”





Source link

Leave a Reply

Your email address will not be published. Required fields are marked *