The White House is weighing a plan to cancel up to $10,000 in student loan debt per borrower, just months before the more than two-year-long moratorium on loan payments resumes in August, according to a new report.
The Washington Post, citing three people with knowledge of the matter, reported that Biden had wanted to make the announcement as soon as this weekend, when he is due to give the commencement address at his alma mater, the University of Delaware.
However, that plan reportedly changed following Tuesday’s mass shooting an Robb Elementary School in Uvalde, Texas that killed 19 students and two teachers.
The Washington Post reported that the plan — which has not been finalized — would limit loan forgiveness to Americans who earned fewer than $150,000 the previous year. Married couples filing jointly will have had to earn fewer than $300,000 to qualify.
Last month, Biden extended the pause on federal student loan repayments until Aug. 31, citing the ongoing coronavirus pandemic and “unprecedented economic disruption it caused.”
“If loan payments were to resume on schedule in May, analysis of recent data from the Federal Reserve suggests that millions of student loan borrowers would face significant economic hardship, and delinquencies and defaults could threaten Americans’ financial stability,” he said at the time.
Former President Donald Trump initially paused the repayments in March 2020 at the start of the COVID-19 pandemic. Biden has extended the moratorium three times since taking office.
While the White House did not immediately respond to The Post’s request for comment, spokesman Vedant Petal told the Washington Post that “No decisions have been made yet.”
If the Biden administration goes ahead with the move, it is likely to face backlash from both sides of the political aisle. Democrats, including Senate Majority Leader Chuck Schumer (D-NY), and Rep. Alexandria Ocasio-Cortez (D-NY) have urged Biden to cancel student debt up to $50,000 per borrower — an amount the White House has balked at.
“I am considering dealing with some debt reduction. I am not considering $50,000 debt reduction,” Biden said in April. “But I’m in the process of taking a hard look at whether or not there will be additional debt forgiveness and I will have an answer on that in the next couple of weeks.”
Republicans say student loan debt forgiveness would amount to a giveaway to wealthy parents who can afford to pay down their children’s debt – while shifting the burden to taxpayers, many of whom have never attended college.
“Why should a waitress who didn’t attend college pay the student loan debt of a lawyer making $300,000?” Sen. Tom Cotton (R-Ark.) tweeted Friday. “This is exactly what will happen under Biden’s student loan transfer plan.
“There’s no such thing as student loan ‘forgiveness,’” Cotton added. “There’s only transferring the debt from those who took the loans (and benefitted) to those who didn’t attend college or responsibly paid off their debts.”
Ultimately, forgiving $10,000 in student loan debt per borrower could cost more than $200 billion, according to the Committee for a Responsible Federal Budget.
In March, the nonpartisan think tank discouraged extending the moratorium, writing, “It has already cost the federal government over $100 billion and would cost another $50 billion per year to continue. If the payment pause is continued through the summer, it will have cost half as much as forgiving $10,000 per borrower outright. At the same time, it will worsen inflation.”