Biden’s decision on student loan forgiveness unlikely until later this summer, officials say

WASHINGTON — President Biden will likely decide later this summer to partially forgive student loan debt for millions of borrowers, according to administration officials and others familiar with the matter, after the president said there It’s been over a month since he would weigh in on the issue in the coming weeks.

Officials said Mr. Biden would likely announce his plans in July or August, closer to when the pandemic-related pause in federal student loan payments is set to expire, as the president and his senior advisers continue to weigh the political and economic fallout. of such a movement. Earlier this year, the Biden administration extended the pause, which has been in effect since March 2020, until September 1.

The delay means the roughly 40 million people who owe about $1.6 trillion in federal student debt may have to wait to find out if they can have some or all of their loans forgiven.

The White House declined to comment on internal discussions. “The administration continues to evaluate cancellation options and no decision has been made,” a White House official said.

Mr Biden has long been skeptical of using his executive power to erase student loan debt. Officials said he remained concerned about the possible effects the move could have on record inflation, cautious about anything that could be perceived as contributing to high prices. Some people close to Mr. Biden said he had nonetheless warmed to the idea in recent months, as advocates inside and outside the administration made impassioned pleas for him to quit. he acts.

Interest rates on student loans have reached their highest level in years. Dion Rabouin du – explains how they are calculated and why this year’s rates are so high after hitting a record low in 2020. Illustration: David Fang

November’s midterm elections hang above all talk, in which Democrats face the prospect of widespread losses. The president’s advisers weigh the political boost that could come from handing out loans to young people and others against the backlash from voters who haven’t gone to college, don’t have loans or already have them reimbursed.

Some Republican lawmakers have accused Democrats of using debt relief as an irresponsible game for votes.

White House officials have drawn up a series of proposals, officials and others familiar with the matter said, and are waiting for the president to make a final decision. The president’s advisers were hesitant to predict where Mr. Biden might land. But people familiar with the internal discussions said the most likely outcome appeared to be debt forgiveness of around $10,000 per borrower. People earning less than around $125,000 a year would be eligible for the program, though that figure is constantly changing, the people said.

Mr. Biden has already ruled out canceling up to $50,000 in student debt per borrower, the proposal backed by Massachusetts Sen. Elizabeth Warren and other leading progressive Democrats.

“I’m not looking at a $50,000 debt reduction. But I’m looking closely at whether or not there will be…additional debt forgiveness, and I’ll have an answer on that within the next two weeks,” Biden told reporters in late April.

The president’s advisers discussed other restrictions, including limiting any debt forgiveness plan to undergraduate students or people attending public universities. Some of Mr. Biden’s advisers have argued in favor of a broad pardon, arguing, for example, that it would be a mistake to exclude from the program teachers and other holders of higher degrees who generally earn little money.

Another factor complicating the decision: how to implement a major new government program. The Department of Education is already burdened with the existing list of tighter loan forgiveness programs for people who work in public service-related jobs or who have been defrauded by for-profit schools. A broader loan forgiveness program could force millions of Americans to file documents with the government detailing their income.

The Department of Education has so far written off about $25 billion in student loans through a piecemeal approach that has focused on borrowers defrauded by for-profit schools, students with disabilities and those enrolled to public service loan forgiveness programs.

“If there is a decision to make a large [loan forgiveness], that’s obviously something that would help a lot of borrowers,” Education Department No. 2 official James Kvaal said Monday at an event hosted by the Bipartisan Policy Center. “At the same time, and I think students and other broad-based advocates will tell you, we also need permanent solutions. »

The new student debt crisis

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