President Biden has been considering some sort of federal student loan forgiveness for weeks, and it appears it will be a few more weeks before he announces his decision.
Biden will likely announce his plans regarding student debt in July or August, The Wall Street Journal reported Monday. This means the potential decision will come close to the end of the student loan payment moratorium, which is currently set to expire on August 31.
The White House has repeatedly stated the Biden administration continues to assess options regarding student loan forgiveness, and that no decision has yet been made.
In April, multiple sources confirmed to The Hill that Biden was considering expunging at least $10,000 per borrower. Biden has already stated he isn’t considering forgiving $50,000 per borrower. That’s not a big surprise — while on the campaign trail, Biden supported a much smaller plan of up to $10,000 in forgiveness per borrower.
An analysis by the Federal Reserve found forgiving $10,000 per borrower would result in roughly 11.8 million borrowers – slightly more than 31% – having their entire balance eliminated. If the Biden administration were to move forward under this plan, an estimated $321 billion in federal student loans would be forgiven.
How much in debt forgiveness each borrower receives could be dependent on their income. Sources told The Washington Post that relief could be limited to those who make less than $125,000 or $150,000 per individual tax filers or $250,000 or $300,000 for couples who file together.
Forgiveness could also be restricted to loans used for undergraduate education, excluding programs that require additional schooling. When asked about Biden’s concerns about providing relief to borrowers that attended schools like Harvard and Yale, former White House press secretary Jen Psaki explained the president wants to ensure the relief is “targeted to those graduates who have the greatest needs.”
Opponents to student loan forgiveness have argued any relief would benefit Americans with higher incomes who are more capable of paying the loans back.
There has also been confusion regarding Biden’s power to cancel student loans. House Speaker Nancy Pelosi has said he lacks legal authority, instead remarking that it “would be an act of Congress.” Senate Majority Leader Chuck Schumer, on the other hand, has argued Biden could do it under the same legal provision Trump used to delay payments and interest accrual at the start of the pandemic.
Republicans have introduced legislation to not only limit Biden’s authority to extend a payment moratorium but “prohibit the president from canceling outstanding federal student loan obligations due to a national emergency.”
“The majority of Americans do not have college degrees,” Sen. Mike Braun (R-IN) said in April regarding his proposed legislation, called the Stop Reckless Student Loan Actions Act. “Why should they be forced to pick up the tab for college degrees in the name of pandemic relief? This transfer of wealth is not a move to ‘advance equity,’ but rather a taxpayer handout to appease far-left activists.”
Under the Biden administration, roughly $25 billion in federal student loan debt has been canceled for some 1.3 million borrowers. Last week, the Department of Education announced it will discharge the outstanding federal student loans of former Corinthian Colleges students after the school was accused of defrauding students out of millions in federally backed loans. In total, $5.8 billion in loans will be canceled for 560,000 borrowers, making it the largest single-loan discharged by the Education Department.
While $25 billion in total relief may seem like a lot, it equates to about 1.5% of the $1.6 trillion in federal student debt Americans have. Pressure continues to grow for more debt forgiveness as the end of the payment moratorium and midterm elections near.
The Education Department has also confirmed it is “working on new regulations that will permanently improve a variety of the existing student loan relief programs, significantly reduce monthly payments, and provide greater protections for students and taxpayers against unaffordable debts.” Details on these regulations have not yet been released.