Biden cancels $10,000 in student loan debt for borrowers earning less than $125,000
WASHINGTON — President Biden will announce Wednesday that he is canceling $10,000 in student loan debt for Americans earning $125,000 or less per year and pausing payments for all borrowers until Dec. The months of anticipation are capping off on a campaign promise. Relief to millions, according to four people familiar with the announcement.
Mr. Biden will also announce an additional $10,000 loan waiver for students receiving Pell Grants at the college, focusing additional aid on those from low-income backgrounds.
The administration would argue that 90 percent of the relief would go to families earning $75,000 per year or less. Debt relief will be available only to individuals earning $125,000 per year or less, or households earning $250,000 per year or less.
The loan waiver, though far less than the amount some Democrats were pushing for, comes after months of deliberations over fairness and fears it could drive up inflation ahead of the midterm elections. The plan will almost certainly face legal challenges, making the timing of any relief uncertain.
The question of how far the United States should go in providing loan forgiveness – and who should benefit from it – emerged as one of the more contentious issues for Mr Biden and highlighted deep divisions in the White House. Across the United States, 45 million people owe $1.6 trillion in federal loans taken out for college—more than any consumer loan other than car loans, credit cards, or mortgages.
Many Democrats have argued that loan forgiveness is necessary to address racial disparities in the economy. But critics say the broad loan waiver is unfair to those who have tightened their belts to pay for college, and Republicans and some Democrats argue that it could help inflation by giving consumers more money to spend. will increase.
The White House sought to address those economic concerns by targeting relief. Mr Biden linked the waiver with an announcement that all student borrowers should resume repayment of their loans after the end of the year, a standstill that ended in March 2020 as the pandemic slowdown deepened.
On the face of it, the move could cost taxpayers about $300 billion or more of money they effectively lent that will never be repaid. But the actual cost is hard to calculate, and small, because much of that debt was never likely to be repaid. More than eight million people – one in five borrowers whose payments are owed – had defaulted on their loans before the coronavirus pandemic. Many of them had very low balances and would now be eligible to cancel their loans.
Several Democratic lawmakers and progressive groups argued that $50,000 in debt would be needed to address economic racial disparities, showing that Black and other non-white borrowers had higher average loan balances than their white peers. ends with.
But Representative Tony Cardenas, a California Democrat who met with the White House to advocate for debt cancellation, said even limited student loan relief could be the galvanizing factor that Mr Biden’s party needs before midterm in November.
What we consider before using anonymous sources. How do sources know the information? What is his inspiration for telling us? Have they been proven reliable in the past? Can we confirm the information? Even when these questions are satisfied, The Times uses anonymous sources as a last resort. The reporter and at least one editor know the identity of the source.
“Many young people will be able to breathe a sigh of relief,” said Mr. Cardenas, “who are going to be able to hope to buy a house soon; they can look forward to starting a family soon.”
He and other members of the Hispanic caucus helped to mount pressure on Biden this spring when he said he indicated in a private meeting that he intended to provide some sort of debt relief for Americans. Soon after, the president publicly said he was considering the move and would announce details in the coming weeks.
But inside the White House, top aides to Mr Biden were debating the political and economic implications of the decision. According to people familiar with his thinking, the president was concerned that loan cancellations would be seen as a cheap gift that would be a disgrace to those who paid his or her relative’s tuition. Some top aides also argued that Mr Biden lacked the legal authority to proceed with a comprehensive loan waiver and that he should work with Congress instead of using executive action.
Rising inflation has also complicated the process.
“In the midst of crushing the Biden-flash, how can the president justify a student loan giveaway that hurts Americans the most by inflation?” Texas Representative Kevin Brady, the top Republican on the Ways and Means Committee, said last month.
Mr Biden’s economic advisers, however, made the case that the cancellation would have a negligible effect on the rise in consumer prices, by resuming loan payments and linking loan forgiveness with an income cap. The president’s chief of staff, Ron Klein, also advised him that providing relief could energize young voters who are becoming increasingly disenchanted with him.
Senate Democrats continued to make direct appeals to the White House in the days leading up to the decision. Senator Charles Schumer of New York, the majority leader, as well as Senators Elizabeth Warren of Massachusetts and Raphael Warnock of Georgia, met with Klein and Brian Dees, one of Biden’s top economic advisers, to lobby the White House on the student Can you loan forgiveness.
Mr Schumer spoke to Mr Biden on Tuesday night and asked him to cancel as much of the debt as possible, according to a Democrat familiar with the conversation.
Legal challenges are expected, although who will stand to press their case in court is unclear. A recent Virginia Law Review article argued that the answer could be none: states, for example, have little say in the operation of the federal loan system.
Mary-Pat Hector, a graduate student at Georgia State University and an activist who has pushed for loan forgiveness, said Mr Biden’s move was to support those frustrated by the administration’s failure to meet other policy goals. There was an important first step, such as providing two free years of community college.
“They were told: Vote because your life depends on it,” said Ms. Hector, 23, who has a $50,000 loan from Spelman College. “And then we’re here on the ground, months away from the midterm elections, and people in these communities are wondering, ‘Does my vote really matter?'”
In addition to college debt, Ms. Hector said her mother had also borrowed to pay for her education. He criticized the administration’s decision to impose limits on who would receive loan forgiveness based on salary, noting that while some of his peers earned healthy incomes, they would also be responsible for supporting younger siblings who Can borrow to attend college.
“You are still in unavoidable debt from school, and you are still taking care of your family and community,” Ms Hector said. “My parents are probably in lifelong debt to get me in that position, and I have to repay them by making sure my younger brother goes to school. That’s the pressure on you.”