Biden poised to forgive $10K of student loan debt and extend final repayment pause: reports
President Biden is expected to announce on Wednesday, long-anticipated plans to forgive up to $10,000 in student loans and extend the COVID pause in repayments until the end of the year.
Biden has faced pressure from liberals to provide broader relief to hard-hit borrowers, and from moderates and Republicans questioning the fairness of any widespread forgiveness. The delay in Biden’s decision has only heightened the anticipation for what his own aides acknowledge represents a political no-win situation.
The forgiveness plan is expected to benefit most borrowers making less than $125,000 a year. It is designed to help young borrowers and give Biden’s Democratic allies a crucial boost ahead of the November midterm elections.
President Joe Biden speaks in the South Court Auditorium on the White House complex in Washington, D.C. on April 28, 2022. (Susan Walsh/)
The nation’s federal student debt now tops $1.6 trillion after ballooning for years. More than 43 million Americans have federal student debt, with almost a third owing less than $10,000 and more than half owing less than $20,000, according to the latest federal data.
The continuation of the pandemic-era payment freeze comes just days before millions of Americans were set to find out when their next student loan bills will be due. This is the closest the administration has come to hitting the end of the payment freeze extension, with the current pause set to end Aug. 31.
Down-to-the-wire decision-making has been a hallmark of the Biden White House, but the particular delay on student loans reflects the vexing challenge confronting him in fulfilling a key campaign promise.
The plan would likely eliminate student debt entirely for millions of Americans and wipe away at least half for millions more.
Biden hopes to balance the demands of progressives and racial justice advocates for total or much more extensive student loan forgiveness against the concerns of moderates about the economic implications.
Biden decision on forgiving student loans coming soon
The frenzied last-minute lobbying continued Tuesday even as Biden remained on his summer vacation. Senate Majority Leader Chuck Schumer, D-N.Y., one of the loudest advocates in recent years for canceling student loan debt, spoke privately on the phone with Biden, imploring the president to forgive as much debt, up to $50,000, according to a Democrat with knowledge of the call.
Schumer, Democratic lawmakers to push for $50,000 in student loan forgiveness
In his pitch, Schumer argued to Biden that doing so was the right thing to do morally and economically, said the Democrat, who asked for anonymity to describe a private conversation.
Senate Majority Leader Sen. Chuck Schumer of N.Y., center, accompanied by from left, Rep. Mondaire Jones, D-N.Y., D-Mass., Rep. Alma Adams, D-N.C., Rep. Ilhan Omar, D-Minn., Sen. Elizabeth Warren, D-Mass., and Rep. Ayanna Pressley, speaks at a news conference on Capitol Hill in Washington, Thursday, Feb. 4, 2021, about plans to reintroduce a resolution to call on President Joe Biden to take executive action to cancel up to $50,000 in debt for federal student loan borrowers. (Andrew Harnik/)
A previous plan for Biden to announce significant student loan forgiveness in the spring was scrapped to avoid spooking moderates like Sen. Joe Manchin (D-W.V.), who at the time was still on the fence about the White House’s big economic package.
Biden forgives student loans from shuttered college
Republicans and fiscal hawks say the repayment freeze is no longer needed, especially with unemployment at record lows. They deride loan forgiveness as an election season giveaway to Democratic-leaning constituencies.
Activists attend a rally outside of the White House to call on U.S. President Joe Biden to cancel student debt on July 27, 2022 in Washington, DC. (Anna Moneymaker/)
Industry groups had complained that the delayed decision left them with just days to notify borrowers, retrain customer service workers and update websites and digital payment systems, said Scott Buchanan, executive director of the Student Loan Servicing Alliance.
“At this late stage, I think that’s the risk we’re running,” he said. “You can’t just turn on a dime with 35 million borrowers who all have different loan types and statuses.”
With News Wire Services
