White House officials plan President Biden to make an announcement on Wednesday about his proposal to deal with the student loan debtinsiders say.
The president and his senior aides have been weighing for months whether to cancel some of the federal student loan debt. Mr. Biden’s top advisers have discussed several proposals, including eliminating $10,000 in federal student loan debt for borrowers making less than $125,000 a year, the people said. The president’s advisers also discussed extending the pandemic pause on federal student loan payments.
The White House is closely guarding the details of the decision. Only a small group of Mr. Biden’s top aides have been briefed on his plans, some of the people said.
Mr. Biden is scheduled to return to the White House on Wednesday from Delaware, where he is vacationing with his family. The president said he would announce a decision on student loans by August 31.
The White House did not immediately respond to a request for comment.
The move to forgive $10,000 in student debt at certain income thresholds would fall short of progressive Democratic demands for full student debt cancellation or $50,000 per borrower cancellation, but could apply to the majority of the 40 million people who own a combined $1 .6 trillion in student loan debt.
Republicans have opposed broad student debt forgiveness, saying such a move would be unfair to those who have already paid off their loans or never attended college and could worsen inflation.
A report published on Tuesday by the Penn Wharton budget model estimates that a one-time maximum debt forgiveness of $10,000 per borrower with incomes below $125,000 per year would cost about $300 billion.
Last month, more than 100 Democratic senators and House members from across the party’s ideological spectrum asked Mr. Biden to extend the loan repayment pause beyond its Aug. 31 expiration, citing continued economic difficulties. Mr. Biden cited similar reasoning for extending the pause before, most recently in April.
The Biden administration is close to a decision on student loan forgiveness, an issue that could affect millions of Americans and reverberate in the upcoming midterm elections. Here are some of the main challenges complicating the final decision. Illustration: Ryan Trefess
“Resuming student loan payments would force millions of borrowers to choose between paying off their federal student loans or putting a roof over their head, food on the table, or paying for child care and health care,” the Democrats wrote.
Republicans opposed extending the pause, arguing that it amounted to “de facto loan forgiveness.” Top House Republicans unveiled a bill this month that would end the moratorium as well as overhaul other aspects of the federal student loan portfolio. The bill is not expected to go anywhere as long as Democrats control Congress and the White House.
The White House left borrowers, loan servicers and the Education Department itself in the dark as Mr. Biden considered whether to extend the pause. Last month, the administration told creditors refrain from sending billing notices or other messages related to restarting payments.
Loan servicers are contracted with the federal government to manage student loan payments. They communicate with borrowers about how much they owe, where and how to send payments, and answer questions borrowers have about repayment programs. They usually send billing notices at least 30 days before payments start so borrowers can plan ahead.
On Monday, a group of credit servicers urged the administration to make a decision and said any move so close to the deadline raises the chances of “borrower misunderstanding incidents,” according to a letter seen by The Wall Street Journal.
“You should be aware that any announcement at this late date, less than ten days before the scheduled September 1 reopening, risks operational disruptions,” wrote Scott Buchanan, head of the Student Loan Servicing Alliance, an industry group.
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