Millions of Americans waited to hear the fate of their federal student debt on Wednesday as President Joe Biden prepared to deliver on his campaign promise to provide up to $10,000 in debt forgiveness.
Details of the plan have been closely watched, but borrowers earning less than $125,000 a year would be eligible for loan forgiveness, according to three people familiar with the decision. Biden is also expected to extend a pause on federal student loan payments through January.
If it survives legal challenges that are almost certain to come, Biden’s plan could provide a boon to part of the nation heading into this fall’s midterm elections. More than 43 million people owe a combined federal student debt of $1.6 trillion, nearly a third of whom owe less than $10,000, according to federal data.
Still, the action is unlikely to thrill any of the factions that have been jostling for influence as Biden weighs how much to cancel and for whom.
Biden has faced pressure from liberals to provide broader relief to hard-hit borrowers, and from moderates and Republicans questioning the fairness of any broad pardons. The delay in Biden’s decision has only heightened anticipation for what his own aides recognize as a political no-win situation. The people spoke on condition of anonymity to discuss Biden’s planned announcement ahead of time.
The continuation of the pandemic-era payment freeze comes just days before millions of Americans are ready to know when their next student loan bills will be due. It’s the closest the administration has come to the end of the payment freeze extension, with the current pause set to end on August 31.
Wednesday’s announcement was set for the White House after Biden returned from vacation in Rehoboth Beach, Delaware. The administration had briefly considered graduate schools in the president’s home state for greater disclosure, but scaled back plans.
During the 2020 presidential campaign, Biden was initially skeptical of student loan debt forgiveness as he battled more progressive candidates for the Democratic nomination. The senses. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., had offered cancellations of $50,000 or more.
As he tried to build support among young voters and prepare for an election battle against President Donald Trump, Biden unveiled his initial debt forgiveness proposal of $10,000 per borrower, with no mention of a cap of income.
Biden has cut back on his campaign promise in recent months by passing the income limit as soaring inflation has had a political impact and as he aimed to ward off political attacks that the cancellation would benefit those who had a higher net salary. But Democrats, from members of the congressional leadership to those facing tough re-election bids in November, have pushed the administration to go as far as possible on debt relief, seeing it in part as a galvanizing issue, especially for black voters and young people this fall.
Last-minute frantic lobbying continued Tuesday even as Biden remained on summer vacation. Senate Majority Leader Chuck Schumer, D.N.Y., one of the most vocal advocates in recent years for student loan debt forgiveness, spoke privately by phone with Biden, imploring the president to write off as much debt as the administration can, according to a Democrat. with knowledge of the call.
In his speech, Schumer argued to Biden that this was the right thing morally and economically, said the Democrat, who requested anonymity to describe a private conversation.
Within the administration, officials have been discussing since at least the start of the summer the cancellation of more than $10,000 in student debt for certain categories of borrowers, such as Pell Grant recipients, according to three people aware of the deliberations. That remained one of the last variables Biden considered ahead of Wednesday’s announcement.
Democrats are betting Biden, who has seen his public approval rating plummet over the past year, can help motivate young voters to the polls in November with the announcement.
Although Biden’s plan is narrower than what he originally proposed during the campaign, “he’ll get a lot of credit for following through on something he committed to,” said Celinda Lake, a Democratic pollster. who worked with Biden in the 2020 election.
She described student debt as a “front door issue” for young voters, meaning it affects 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 debt cancellation in one way or another – whether for all borrowers or those most in need – although student loans do not rank high among the issues that most concern people in this age group.
Some supporters were already preparing for disappointment.
“If the rumors are true, we have a problem,” NAACP chairman Derrick Johnson, who aggressively lobbied Biden to take bolder action, said Tuesday. He pointed out that black students face higher beginning burdens than white students.
“President Biden’s decision on student debt cannot become the latest example of a policy that has left black people – especially black women – behind,” he said. “This is not how you treat black voters who turned out in record numbers and provided 90% of their votes to save democracy again in 2020.”
John Della Volpe, who has worked as a consultant on Biden’s campaign and is the polling director at the Harvard Kennedy School Institute of Politics, said the details of Biden’s announcement were less important than the decision itself.
“It’s a matter of trust in politics, in government, in our system. It’s also a matter of trust in the individual, which in this case is President Biden,” Della Volpe said.
Combined with fears about expanding abortion restrictions and Trump’s re-emergence on the political scene, Della Volpe said the cancellation of student debt “adds further tailwind to an already improving position with youth”.
Republicans, meanwhile, see only political upside if Biden pursues large-scale student debt cancellation before the November midterms, anticipating backlash from Democrats — especially in states where there is a large number of working-class voters without a college degree. Critics of a broad student debt forgiveness also believe it will open the White House to lawsuits, on the grounds that Congress never gave the president explicit authority to forgive the debt himself.
The Republican National Committee on Tuesday called Biden’s expected announcement a “handout to the rich,” saying it would unfairly burden low-income taxpayers and those who have already paid off student loans by covering higher education costs for the rich.
“My neighbor, a detective, has worked 3 jobs (including selling carpets) and his wife has worked to ensure their daughter gets a quality college degree without student debt,” said Rep. Kevin Brady, R -Texas, the best Republican in the House. Ways and Means Committee, tweeted on Tuesday. “Big sacrifice. Now their tax dollars have to pay off someone else’s student debt?
Biden’s protracted deliberations dispatched federal loan managers, who were tasked with withholding billing statements while Biden weighed a decision, grumbling.
Industry groups complained that the late decision left them just days to notify borrowers, retrain customer service employees and update websites and digital payment systems, said Scott Buchanan, executive director of the Student Loan Servicing Alliance.
This increases the risk of some borrowers being inadvertently told they need to make payments, he said.
“At this late stage, I think that’s the risk we’re running,” he said. “You can’t settle for a dime with 35 million borrowers who all have different loan types and statuses.”
AP Education Writer Collin Binkley in Washington contributed to this report.