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A decision on forgiving federal student loan debt is expected by the end of August.
Stefani Reynolds/AFP/Getty Images
The Biden administration is expected to make an announcement on federal student debt before the Aug. 31 deadline that restarts the clock on debt repayments that have been paused for two years.
Secretary of Education Miguel Cardona said on Sunday that the update would come “within the next week or two,” though he wouldn’t provide details.
President Joe Biden pledged to forgive up to $10,000 during his campaign. The White House was considering an income cap of around $125,000 for an individual to be eligible, The Wall Street Journal reported in May.
Senate Majority Leader Chuck Schumer (D., N.Y) was among the lawmakers who favored a plan to forgive up to $50,000 for each borrower, something Biden has said he wouldn’t do.
But the White House has extended the pause on loan repayments four times, most recently in April, when Biden said: “I am not considering $50,000 debt reduction, but I’m in the process of taking a hard look at whether or not there will be additional debt forgiveness.”
Last week, the Education Department announced plans to cancel $3.9 billion in student loan debt for those who who attended for-profit ITT Technical Institute, which is now defunct. That brings the total of loans forgiven under the Biden administration to $32 billion.
About 44 million borrowers collectively owe $1.7 trillion in federal student loan debt, according to CNBC, but its poll found that 59% of Americans are worried that forgiving student loans could make inflation worse.
Forgiving up to $50,000 in debts for each borrower would cost $904 billion and would wipe out the entire balance for 79% of the 37.9 million federal borrowers, MarketWatch reported, citing estimates from the New York Federal Reserve.
Limiting loan forgiveness to those with a household income of less than $75,000 would cut the cost of the program to $507 billion, while forgiving a maximum of $10,000 per borrower for those earning less than $75,000 would cost $182 billion.
Write to Janet H. Cho at [email protected]
Source: https://www.barrons.com/articles/u-s-could-cancel-some-student-debt-expect-news-soon-51661192477?siteid=yhoof2&yptr=yahoo