President Biden will erase up to $10,000 in federal student debts for many Americans on Wednesday, according to three people familiar with the idea.
Biden is under pressure from liberals to help hard-hit borrowers and from moderates and Republicans to be fair. Biden’s delay has increased expectation for what his advisers admit is a political no-win situation. People spoke anonymously about Biden’s planned announcement.
The exact terms of Biden’s plan, which will include an income ceiling limiting forgiveness to those earning less than $125,000 a year, were not completed on the eve of the presentation.
The Biden White House is known for making last-minute decisions, but the delay on student loans underlines the difficulty of achieving a critical campaign pledge.
The approach would undoubtedly wipe out college debt for millions of Americans.
Federal student debt has ballooned to $1.6 trillion. More than 43 million Americans have federal student debt, with more than half owing less than $20,000, according to the latest official figures.
The pandemic-era payment suspension continues just days before millions of Americans’ next student loan bills are due. The current payment freeze is set to end Aug. 31.
After Biden returns from vacation in Rehoboth Beach, Delaware, the announcement will be made. The administration considered higher education institutions in the president’s home state for a greater expose, but backed off.
Biden was initially suspicious about student loan debt forgiveness as he ran against more progressive Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt.
Biden proposed debt forgiveness of $10,000 per borrower, with no income cap, to win over younger people and prepare for a general election struggle against then-President Donald Trump.
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Biden modified his campaign promise by supporting the income restriction amid increasing inflation and political charges that the cancellation would benefit individuals with higher take-home pay. Democrats, from congressional leaders to those facing tough re-election campaigns this fall, have pushed the administration to go as broad as possible on debt relief, seeing it as a mobilizing issue, especially for Black and young voters.
While Biden was on vacation, last-minute lobbying persisted. According to a Democrat with knowledge of the call, Senate Majority Leader Chuck Schumer, D-N.Y., pleaded with Biden to forgive as much student loan debt as possible.
Schumer told Biden that doing so was morally and economically right, a Democrat who requested anonymity said.
Three sources with knowledge of the deliberations say administration officials have explored canceling more than $10,000 in student debt for Pell Grant recipients. Biden contemplated this before Wednesday’s announcement.
Democrats hope Biden’s announcement would energize younger folks to vote in November.
Biden’s plan is smaller than what he advocated during the campaign, but “he’ll get a lot of credit for following through,” said Democratic pollster Celinda Lake.
Student debt is a “gateway issue” for younger voters, meaning it affects their attitudes and career choices. 59% of 18- to 29-year-olds surveyed by the Harvard Institute of Politics in March advocated debt cancellation of some form — for all borrowers or those most in need — but student debts did not rank high among their top concerns.
Some supporters expected disappointment.
Derrick Johnson, president of the NAACP, said Tuesday, “If the reports are accurate, we’ve got a problem.” He said black kids had heavier debut duties.
“President Biden’s decision on student debt cannot become the latest example of a policy that leaves Black people behind,” he stated. “This isn’t how you respect Black voters who showed out in unprecedented numbers and saved democracy in 2020.”
John Della Volpe, a Biden campaign consultant and polling director at Harvard Kennedy School, said the decision itself was more essential than the details.
“Trust in politics, government, our system. It’s also about trusting President Biden.”
Student loan forgiveness “adds a tailwind to an already strengthening position with young people,” Della Volpe added.
The RNC called Biden’s scheduled statement a “handout to the wealthiest,” saying it will unfairly affect lower-income taxpayers and those who have already paid off their student debts.
Rep. Kevin Brady, R-Texas, the top Republican on the House Ways and Means Committee, tweeted Tuesday that his neighbor, a detective, worked three jobs (including selling carpet) to ensure their daughter obtained a fine college degree without student debt. “Sacrifice. Now their taxes pay someone else’s college debt?”
At this point, he replied, that’s the risk. “35 million debtors with diverse loan types and statuses can’t be changed overnight.”