A long-awaited announcement by the Biden administration could come as soon as Wednesday, which would reportedly cancel up to $10,000 in loan forgiveness for borrowers earning less than $125,000.
The announcement is expected to also include an extension of the suspension of student loan payments for millions of students. Payments have not been required on most federal student loans since March 2020. Biden has extended the pause four times. The current freeze is scheduled to expire on Aug. 31.
According to Bloomberg, some sources anticipate the repayment pause will be extended until the end of 2022.
“That would take the repayment freeze beyond the November midterm elections, in which Democrats are hoping to stave off a loss of their slim House and Senate majorities. Support from young voters could help boost Democrats’ showing in the upcoming balloting,” Bloomberg reported.
In addition to income-based forgiveness, forgiveness may also be extended to “specific subsets of the population, according to sources familiar with internal discussions in the administration,” CNN reported.
Thus far in his presidency, Biden has canceled more student loan debt than any other president, with his administration authorizing the cancellation of nearly $32 billion in loans largely for borrowers who were defrauded by for-profit colleges and for permanently disabled borrowers, according to CNN.
Students walk on the University of Utah campus in Salt Lake City on Tuesday, Aug. 23, 2022. A long-awaited announcement by the Biden administration, which would reportedly cancel up to $10,000 in loan forgiveness for borrowers earning less than $125,000, could come as soon as Wednesday.
Jeffrey D. Allred, Deseret News
Americans owe more than $1.7 trillion in student loan debt, which has risen by roughly $1 trillion since 2009, according to the Federal Reserve. That’s more than any other category of consumer debt except mortgages.
Forgiving debt and even pausing repayment is politically polarizing. People who did not have the opportunity to attend college or repaid loans themselves view forgiveness as unfair.
But Democratic lawmakers, labor leaders and civil rights groups have been pressuring the White House to forgive more than $10,000 in student debt, arguing higher debt loads are disproportionately carried by Black or lower-income students, according to Bloomberg.
Some studies show that forgiving so much student debt would also cost more than any kind of economic stimulus it would create.
Forgiveness of federal student loans, even partial forgiveness, appears to be a wildly unpopular idea in Utah, according to results of a Dan Jones & Associates poll conducted for the Deseret News and the Hinckley Institute of Politics in May.
More than 800 Utah registered voters expressed low rates of support for federal loan forgiveness for all borrowers and only slightly higher support — 14% — for partial forgiveness of loans. Partially pardoning loans for lower-income borrowers had the highest level of support, but even then it was just 17% overall and as high as 25% among respondents with graduate degrees.
Only 11% of those polled said all federal student loans for all borrowers should be forgiven, according to the poll.