Student Loan Borrowers Await Biden Plan On Debt Forgiveness

by | Aug 24, 2022 | Politics

WASHINGTON (AP) — Millions of Americans were waiting to learn the fate of their federal student debt on Wednesday as President Joe Biden was set to deliver on his campaign promise to provide $10,000 in debt cancellation for many Americans — and up to $10,000 more for those with the greatest financial need.Details of the plan have been kept closely guarded, but borrowers who earn less than $125,000 a year, or families earning less than $250,000, would be eligible for the $10,000 loan forgiveness, according to three people familiar with the decision. For recipients of Pell Grants, which are reserved for undergraduates with the most significant financial need, the federal government would cancel up to an additional $10,000 in federal loan debt, according to a copy of administration talking points obtained by the Associated Press.AdvertisementBiden is also set to extend a pause on federal student loan payments for what the White House calls the “final time” through the end of 2022.If his plan survives legal challenges that are almost certain to come, it could offer a windfall to a swath of the nation in the run-up to this fall’s midterm elections. More than 43 million people have federal student debt, with an average balance of $37,667, according to federal data. Nearly a third of borrowers owe less than $10,000, and about half owe less than $20,000. The White House estimates that Biden’s announcement would erase the federal student debt of about 20 million people.Proponents say cancellation will narrow the racial wealth gap — Black students are more likely to borrow federal student loans and at higher amounts than others. Four years after earning bachelor’s degrees, Black borrowers owe an average of nearly $25,000 more than their white peers, according to a Brookings Institution study.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.AdvertisementBiden has faced pressure from liberals to provide broader relief to hard-hit borrowers, and from moderates and Republicans questioning the fairness of any widespread forgiveness. The delay in Biden’s decision has only heightened the anticipation for what his own aides acknowledge represents a political no-win situation. The people spoke on the condition of anonymity to discuss Biden’s intended announcement ahead of time.The continuation of the coronavirus pandemic-era payment freeze comes just days bef …

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