It appears President Joe Biden is moving forward with student loan debt forgiveness after a week full of moves on the matter to round out April.
Biden started the week by giving members of the Congressional Hispanic Caucus “strong indications” that his administration is preparing to take executive action on forgiving student loans in the coming months. He then clarified mid-week that he was not considering one of the larger forgiveness plans fellow Democrats had been calling for.
By Friday, multiple sources confirmed Biden is considering expunging at least $10,000 per borrower, according to The Hill.
Here are four things we know about the possible student loan forgiveness we could see this year.
Don’t expect $50,000 in forgiveness
Forgiving $50,000 in student loan debt is one of the larger proposals (besides complete forgiveness of federal student loans, of course) that has been suggested by lawmakers, including Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA).
On Thursday, President Biden, when asked about using executive authority to cancel student loan debt, told reporters he is not considering $50,000 in debt reduction.
It’s not necessarily a surprise that Biden isn’t considering $50,000 per borrower — while on the campaign trail, Biden supported a much smaller plan of up to $10,000 in forgiveness per borrower.
A recent analysis by the Federal Reserve found forgiving at most $50,000 per borrower would cost over $900 billion, but would erase the full balance for nearly 80% of borrowers.
It’s likely to be $10,000 per borrower
The Federal Reserve’s analysis 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.
Forgiving $10,000 per borrower could cost anywhere between $245 billion and $321 billion, according to multiple reports, but setting an income cap of $75,000, for example, could cut the cost to $182 billion.
There may be an income cap
How much student loan forgiveness you receive could be dependent on how much you make. Sources tell 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. ‘
White House Press Secretary Jen Psaki told reporters Monday that while Biden has mentioned having an income cap on student debt relief, those details haven’t yet been finalized.
Forgiveness could also be restricted to loans used for undergraduate education, excluding programs in medicine and law, for example, that require additional schooling.
When asked about Biden’s concerns of providing relief to borrowers that attended schools like Harvard and Yale, 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, The Hill reports.
It’s unclear if Biden has the power
There has 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, The Hill reports.
According to The Hill, Biden requested a memo from the Department of Education on his authority to forgive student debt through an executive order a year ago. Psaki said Monday that she had no update on the status of that memo.
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 a press release regarding the 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 $17 billion in federal student loan debt has been canceled for some 725,000 borrowers. Last week, the Department of Education announced another $238 million in student loan relief for roughly 28,000 borrowers defrauded by Marinello Schools of Beauty.
While that may seem like a lot, that $17 billion in total relief actually equates to about 1% 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 — set to expire on August 31 — and midterm elections near.