WASHINGTON (AP) — President Joe Biden on Wednesday will announce his long-delayed move to forgive many Americans up to $10,000 on government student loans and extend a payment pause through January, according to three people familiar with the plan.
Biden has faced pressure from the Liberals to bring broader relief to hard-hit borrowers, and by moderates and Republicans who question the fairness of widespread forgiveness. That Delay in Biden’s decision has only heightened anticipation for what his own aides concede as a political no-win situation. People spoke on condition of anonymity to pre-discuss Biden’s intended announcement.
The specifics of Biden’s plan, which will include an income cap that limits forgiveness to those earning less than $125,000 a year, have been reserved for an unusually small circle within the Biden administration and were not available on the eve of the announcement closed.
Straightforward decision-making has been a hallmark of the Biden White House, but the particular delay on student loans reflects the exasperating challenge he faces in fulfilling a key campaign promise.
The plan would likely completely eliminate student debt for millions of Americans and wipe away at least half for millions more.
The country’s federal student debt now tops $1.6 trillion after years of skyrocketing. According to the latest federal data, more than 43 million Americans have federal student debt, with nearly a third owing less than $10,000 and more than half owing less than $20,000.
The continuation of the pandemic-era payment freeze comes just days before millions of Americans were expected to find out when their next student loan bills are due. This is the closest point the administration has reached the end of the payment freeze extension, with the current pause ending on August 31.
Wednesday’s announcement was set for the White House after Biden returned from vacationing in Rehoboth Beach, Delaware. The administration had briefly considered colleges in the president’s home state for a major reveal, but scaled back its plans.
Biden was initially skeptical about student loan debt relief when he approached the more progressive Senators Elizabeth Warren, D-Mass.
As he sought to bolster support from younger voters and prepare for a campaign against then-President Donald Trump, Biden presented his original proposal for $10,000 debt relief per borrower without mentioning an income cap.
Biden has narrowed his campaign pledge in recent months by adopting the earnings cap as rising inflation took a political toll and he aimed to deflect political attacks that the cancellation would benefit those with higher net wages. But Democrats, from members of the congressional leadership to those facing difficult re-election bids this November, have been urging the administration to go as far as it can on debt relief, and see this as an electrifying issue in some cases, especially for black and young voters in this fall .
Frantic last-minute lobbying continued Tuesday even as Biden stayed on his summer vacation. Senate Majority Leader Chuck Schumer, DN.Y., one of the most vocal supporters of student loan debt relief in recent years, spoke privately with Biden and implored the President to forgive as much debt as possible, according to a Democrat with knowledge of the call .
In his pitch, Schumer argued with Biden that it was the right thing to do morally and economically, said the Democrat, who requested anonymity to describe a private conversation.
Officials within the administration have been discussing the forgiveness of more than $10,000 in student debt for certain categories of borrowers, such as seniors, since at least early summer. That remained one of the last variables Biden considered in Wednesday’s announcement.
Democrats are betting that the announcement can help Biden, whose public approval rating has tumbled over the past year, help motivate younger voters to vote in November’s election.
Although Biden’s plan is tighter than what he originally proposed during the campaign, “he’s going to get a lot of credit for executing what he’s committed to,” said Celinda Lake, a Democratic pollster who spoke during the 2020 election worked with Biden.
She described student debt as a “gateway issue” for younger voters, meaning it influences their views and decisions about housing affordability and career choices. A survey of 18- to 29-year-olds conducted by the Harvard Institute of Politics in March found that 59% of respondents supported some type of debt relief – be it for all borrowers or those most in need – although student loans did not rank high among the issues people in this age group are the most busy.
Some supporters were already braced for disappointment.
“If the rumors are true, we have a problem,” Derrick Johnson, the NAACP president who has aggressively urged Biden for bolder action, said Tuesday. He emphasized that black students face higher debut loads than white students.
“President Biden’s college debt decision cannot become the latest example of policies that have left black people — particularly black women — behind,” he said. “That’s not how you treat black voters who turned out in record numbers and cast 90% of their votes to save democracy again in 2020.”
John Della Volpe, who worked as an advisor on Biden’s campaign and is director of polls at the Harvard Kennedy School Institute of Politics, said the details of Biden’s announcement were less important than the decision itself.
“It’s about trust in politics, in the government, in our system. It’s also about trust in the individual, which in this case is President Biden.”
Coupled with fears about the expansion of abortion restrictions and Trump’s re-emergence on the political scene, Della Volpe said the student debt relief “gives an additional tailwind to an already improving position among young people.”
Republicans, meanwhile, see only political gains if Biden seeks large-scale student debt relief ahead of the November midterms and anticipates a backlash from Democrats — particularly in states where there are large numbers of working-class voters without college degrees. Critics of sweeping student debt cancellation also believe it will open the White House to lawsuits, since Congress has never given the president explicit authority to cancel debt himself.
The Republican National Committee blasted Biden’s expected announcement Tuesday as an “announcement to the wealthy,” claiming it would unfairly burden lower-income taxpayers and those who have already paid off their student loans by covering the cost of higher education for the wealthy.
“My neighbor, a detective, had 3 jobs (including selling rugs) and his wife worked to make sure their daughter got a good college degree with no college debt,” said Rep. Kevin Brady, R-Texas, the best Republicans in the House Ways and Means Committee, tweeted Tuesday. “Great sacrifice. Now their taxes have to pay off someone else’s student debt?”
Biden’s lengthy deliberations have led to grumblings from federal credit servicers who have been ordered to withhold statements while he weighs a decision.
Industry groups have complained that the late decision gave them just days to notify borrowers, retrain customer service representatives and update websites and digital payment systems, said Scott Buchanan, executive director of the Student Loan Servicing Alliance.
It increases the risk that some borrowers will inadvertently be told they have payments to make, he said.
“At this late stage, I think that’s the risk we’re taking,” he said. “You can’t just turn in a dime with 35 million borrowers, all of whom have different loan types and statuses.”
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