Biden Reportedly Eyes $10,000 Debt Relief For Borrowers Under Income Threshold

Topline

The Biden Administration could forgive $10,000 worth of student loan debt for Americans who earn less than $125,000 annually, CNN reported Monday, following months of deliberations and as a two-year pause on student loan payments is set to end next week.

President Joe Biden speaks on on August 5.

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Key Facts

The White House may unveil its sweeping student loan forgiveness program as soon as Wednesday, according to CNN, which cited several unnamed sources.

The outlet cautioned that details on the program are still in flux, but the Biden Administration is “leaning toward” forgiving $10,000 per borrower with an income limit.

The plan is similar, but not identical, to earlier proposals weighed by the White House: In May, the Washington Post reported the Biden Administration was considering forgiving $10,000 in debt for borrowers who make under $150,000, and then-White House Press Secretary Jen Psaki told reporters in May $125,000 was a likely income threshold.

Forbes has contacted the White House and the Department of Education for comment.

What To Watch For

Secretary of Education Miguel Cardona told NBC’s Meet the Press on Sunday officials will make a decision on student loans “within the next week or so.” The Biden Administration is facing a looming deadline: A pandemic-era moratorium on federal student loan payments and interest is scheduled to end after August 31 unless it’s extended yet again, forcing borrowers to start making monthly payments for the first time since early 2020.

Key Background

President Joe Biden has repeatedly extended the student loan payment moratorium and offered targeted loan forgiveness for attendees of certain schools and other borrowers, but some Democrats have pressured Biden to cancel a large share of most—if not all—Americans’ student loans. Biden said on the campaign trail he wanted to forgive $10,000 of student debt per person, but he has openly questioned whether he has the legal authority to do more without congressional approval, and he is reportedly weighing whether a broad forgiveness program would add to soaring inflation rates and primarily benefit affluent college graduates. Meanwhile, Senate Majority Leader Chuck Schumer (D) has pushed Biden to forgive $50,000 per borrower, and some progressives have argued against imposing an income limit. Polling on student loan forgiveness is divided along political lines, with Democrats overwhelmingly favoring a loan cancellation program while Republicans largely oppose it.

Big Number

59%. That’s the percentage of Americans who are worried student loan forgiveness could worsen inflation, which hit a 40-year high in June, according to a poll sponsored by CNBC. Some 32% of respondents said they support forgiving all Americans’ student loans, while 34% only want loans to be forgiven for people “in need” and 30% said nobody should get loan forgiveness.

Chief Critic

Economist Larry Summers pushed back against calls for “unreasonably generous student loan relief” in a series of tweets Monday, arguing a broad debt forgiveness program could add to inflation and wouldn’t do anything to help future students who can’t afford to go to college. The Clinton-era Treasury Secretary said the administration shouldn’t extend the payment moratorium, and if it decides to permanently forgive debt, it should only offer a few thousand dollars in relief to “those with genuinely middle class incomes.”