- Biden is leaning toward up to $10,000 in student loan forgiveness for those earning less than $125,000 a year, per CNN.
- This announcement could come as early as Wednesday.
- Borrowers are also awaiting news of an extension to the payment break, which will expire after August 31.
The last days of waiting for student loan cancellation may have finally arrived.
On Monday, CNN reported that President Joe Biden is considering canceling up to $10,000 in student debt for borrowers earning less than $125,000 a year, according to sources familiar with White House plans. According to CNN, this announcement could come as soon as Wednesday, and a source familiar with the matter confirmed this timetable to Insider.
This occurs just before the student loan payment break expires. In April, Biden extended the break for the fourth time, through August 31, and the president — along with Education Secretary Miguel Cardona — confirmed a decision on another payment break extension, as well as broad debt cancellation, will be announced before the August 31 deadline.
“We know August 31 is a date that a lot of people are waiting to hear from,” Cardona said Sunday. “We talk about it daily and I can tell you that the American people will hear by next week what the Department of Education is doing about it.”
Neither the White House nor the department has publicly confirmed the details of the student loan cancellation, or the possibility of another extension of the payment pause, but calls have mounted from lawmakers and advocates. Democrats to pull borrowers out of limbo and provide them with financial security. . In late July, for example, 107 Democratic lawmakers called on Biden to extend the payment break, and on Monday, NAACP Youth and College Director Cole wrote in a statement that if “debt payments student may be suspended more and more and more again, there’s no reason the president can’t cancel a minimum of $50,000.”
In April, Biden ruled out canceling up to $50,000 in student debt, and his advisers raised concerns about the impact any relief could have on inflation. Jared Bernstein, a member of the White House Council of Economic Advisers, previously told the New York Times that canceling student debt and resuming payments at the same time was under consideration because “the net inflationary effect should be neutral”.
Still, there is speculation that the payment pause will be extended given that the Department of Education recently ordered student loan companies to halt messaging surrounding the payment restart. And while Politico recently obtained documents detailing the department’s readiness to implement the relief once announced, advocates have raised concerns about the targeting of the relief based on income.
For example, if borrowers have to apply for relief or certify their income, the paperwork burden could exclude those most in need of loan forgiveness. “You don’t make politics more progressive because of the difficulty for people to demonstrate that they have low enough income to benefit from it,” Mike Pierce, executive director of the nonprofit Student Borrower Protection Center, told Insider.
Certainly, the White House can reverse its decision at any time before the announcement, and the most certain thing at this point is the expectation of news on student loans before the end of August.