The White House’s latest plan was to waive $10,000 of student debt to every borrower

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White House officials are currently planning to cancel $10,000 of student debt for each borrower, after months of internal deliberation on how to structure loan forgiveness for tens of millions of Americans, three people familiar with the matter said.

People said President Biden had hoped to make an announcement as soon as this weekend at the start of the University of Delaware, but that timing changed after Tuesday’s massacre in Texas.

Two of the people said the White House’s latest plans called for debt forgiveness to be limited to Americans who earned less than $150,000 in the previous year, or less than $300,000 for married couples filing jointly. It was not clear if the administration would simultaneously request the benefits and payments to resume at the end of August, when the current suspension period is set to expire.

The people, who spoke on condition of anonymity because they were not authorized to discuss the deliberations, cautioned that some details of these plans might change before the White House makes a formal decision.

Who Has Student Loan Debt in America?

The potential decision comes after months of uncertainty over the fate of student debt for tens of millions of Americans, with Biden appearing at times skeptical about canceling loans but under pressure from plunging approval rates among young voters ahead of the November elections. The decision will also spark new battles between Democrats and Republicans over federal spending and may prove a critical issue in the course of the election campaign, with Republican lawmakers already saying the idea amounts to wasteful spending that benefits wealthy, university-educated professionals.

The White House said that no final decision has been made on the matter. Biden said he would make a decision on student debt in the “next two weeks” on April 28, about a month earlier.

“No decisions have been made yet,” White House spokesman Vidant Petal said in a statement Thursday.

Erasing $10,000 of debt could cost each borrower nearly $230 billion, according to estimates by the Committee on Responsible Federal Budget, a nonpartisan think tank. However, the resumption of payments to borrowers, which has been pending since March 2020, will bring additional funds into the federal coffers. The think tank said in March that the pause in payments has cost the federal government $100 billion and will amount to about $50 billion annually to maintain. The Washington Post previously reported that the administration was considering making only college debt eligible for forgiveness.

Black women bear a disproportionate share of the $1.7 trillion student debt burden. This is what it means for them to stop paying a student loan. (Video: Amber Ferguson / The Washington Post, Photo: Eric Lee / The Washington Post)

The White House has been searching for economic measures it can take without congressional approval since the collapse of Biden’s agenda for better economic rebuilding at the end of last year. But while the administration has looked at opinion polls that indicate a large majority of young voters support debt cancellation, the policies for this move remain unclear. Biden’s approval ratings for the economy have plummeted amid the fastest price increases in four decades, and his plans to improve housing, health care and child poverty have been hampered by failed negotiations with the senator. Joe Manchin III (DW.Va.). Republicans will further discredit the decision because it is taken unilaterally, without Congress, and even some centrist Democrats are uncomfortable with the idea.

Biden said at a meeting of Hispanic lawmakers last month that he is open to canceling student loan debt. he had I pledged it during the 2020 presidential campaign To waive at least $10,000 of debt to each borrower, after Monday. Elizabeth Warren (Democrat) and other liberals pushed this idea.

Most of the country’s 41 million student borrowers will benefit. Canceling $10,000 of debt for everyone with federal student loans will clear the balances of nearly a third of borrowers, while slashing total debt by at least half by another 20 percent, according to the latest data from the Department of Education. However, it is unclear how income limits will affect these numbers. An estimated 97 percent of all student debt was owned by people with incomes below the $150,000 per capita and $300,000 married couple threshold in 2019, according to Matt Bronnig, founder of the left-leaning People Policy Project.


Most student debt is held in the form of large loans, but most borrowers have small loans.

Around 13% of federal student debt held in loans of $20,000 or less.

…but 53% of borrowers owe less than $20,000

33% from borrowers 10 thousand dollars or less They left on their loans

Source: Ministry of Education

Alyssa Fores/The Washington Post

Most student debt is held in the form of large loans, but most borrowers have small loans.

Around 13% of federal student debt held in loans of $20,000 or less.

…but 53% of borrowers owe less than $20,000

33% from borrowers 10 thousand dollars or less They left on their loans

Source: Ministry of Education

Alyssa Fores/The Washington Post

Most student debt is in the form of large loans, but most borrowers have small loans.

Around 13% Of the federal student debt held in the form of loans of $20,000 or less is still outstanding…

…but 53% of borrowers owe less than $20,000

33% You have They left on their loans

Source: Ministry of Education

Alyssa Fores/The Washington Post

The White House is not expected to immediately release all details of the process borrowers will use to cancel their debt. But it can be very complicated logistically.

For example, the administration imposes an income cap on those who qualify to ensure that high earners do not receive government assistance that they do not need. But there are obstacles to using income to target debt relief. The education and treasury departments can’t easily share tax information for borrowers, and legislation easing restrictions won’t take effect for two years.

Biden administration gives more borrowers a chance to cancel debt

Relying on tax statements can also alienate millions of low-income Americans who don’t file taxes but owe student loans. The self-certification process, where people certify that their income qualifies, may pose challenges for the government to verify information. Even requiring borrowers to apply for a tolerance can limit the scope of the policy. And since it can take months for the Department of Education to implement any program, the political benefits may be limited.

Supporters of student debt forgiveness, including Warren and Senate Majority Leader Charles E. Schumer (DNY), have urged the administration to go much further and cancel at least $50,000 per borrower, if not all outstanding federal education loans. They say reducing the student loan burden will help stimulate the economy and close the racial wealth gap, where black borrowers take on a disproportionate amount of debt. Before a rally at the White House earlier this month, Wisdom Cole, national director of the NAACP’s Division of Youth and Colleges, said, “The black community remains tied up in student debt, and repealing the $10,000 will not break the restrictions.”

White House Officials Weigh Income Limits for Student Loan Forgiveness

But some economists have argued that generous loan forgiveness for college graduates is irresponsible and costly policy. The Committee on Responsible Federal Budget has estimated that nearly 70 percent of the benefits will go to the upper half of the income range. Debt forgiveness critics also say it does nothing to address the costs of college or the troubled lending system. It’s not clear if people who need to borrow to start college this fall, for example, will be eligible for brand-new loans.

However, even by capping the tolerance at $10,000, the Biden administration can help the people who arguably need to cancel — those who have defaulted on their loans. Student loan defaults and delinquencies have centered on borrowers with less than $10,000 in debt before federal student loan payments stopped, according to the Federal Reserve. Fed economists say that borrowers with the least debt often have trouble paying their loans, in part because they haven’t completed the degree needed to improve their earnings.

The narrowing of loan forgiveness criteria is in line with the Biden administration’s targeted approach to debt relief. The administration has already eliminated $18.5 billion in loans to more than 750,000 people by temporarily expanding or simplifying existing forgiveness programs, including those designed to help public employees and borrowers defrauded by their colleges.

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