Topline
President Joe Biden will likely delay a decision on federal student debt forgiveness until later this summer, the Wall Street Journal reported Monday, leaving tens of millions of borrowers waiting to see if Biden will make good on his campaign promise of $10,000-per-person debt forgiveness.
The Biden Administration is considering implementing further federal student loan debt forgiveness.
Key Facts
Biden is likely to announce his plans on student-loan debt in July or August, as administration officials are currently gauging the possible economic and political consequences of further debt forgiveness, the Wall Street Journal reported, citing unnamed administration officials.
Biden’s decision on student loan debt is now set to come just weeks before the November midterms, where some Democratic lawmakers have suggested that debt forgiveness could be a powerful vote-winner.
Unless extended, the current pause on student debt repayments is set to expire August 31.
April 28, Biden said he planned to reach a decision on possible future student loan debt forgiveness “in the next couple of weeks.”
The White House did not immediately respond to a request for comment from Forbes.
Key Background
The ongoing federal student debt repayment pause began in March 2020 as the economic effects of the Covid-19 pandemic were first being felt throughout the U.S. The pause has repeatedly been extended, most recently on April 6, a move the Department of Education said would allow borrowers time to plan a return to making payments. This extension was announced just weeks before the pause would otherwise have expired, leading some advocacy groups to criticize the Biden Administration for leaving borrowers hanging. About 45 million borrowers in the U.S. owe a total of about $1.7 trillion in student loan debt, making student loan debt the second-highest category of consumer debt after mortgage debt. An analysis by the Federal Reserve determined that $10,000 in student debt forgiveness per borrower would entirely eliminate the debt of 11.8 million borrowers, while $50,000 in forgiveness would eliminate the debt of 29.9 million borrowers. Biden has already overseen the cancellation of $16 billion in student loan debt, but has yet to make good on his campaign promise to eliminate $10,000 in debt per borrower.
Tangent
Despite having eliminated more student loan debt than any previous president, Biden is under pressure from some Democratic legislators to take further steps. Senate Majority Leader Chuck Schumer (D-N.Y.) and Sen. Elizabeth Warren (D-Mass.) have repeatedly urged Biden to cancel $50,000 of debt per borrower via executive action, and Sen. Bernie Sanders (I-Vt.) has called for the elimination of all federal student debt. Meanwhile, some Republican lawmakers criticized the actions Biden has already taken to forgive some debt, claiming that debt cancellation encourages students to borrow more and will worsen inflation.
Further Reading
“Biden May Cancel Student Debt Soon, Lawmakers Say After Meeting” (Forbes)
Source: https://www.forbes.com/sites/zacharysmith/2022/06/06/biden-will-reportedly-delay-decision-on-student-debt-forgiveness-until-july-or-august/