Student loan borrowers who anxiously await President Joe Biden’s decision on whether to forgive their debt might have to cool their heels for another couple of months. It could be late summer before the White House issues an announcement — if one is forthcoming at all.
Biden is likely to delay his announcement until at least July or August, the Wall Street Journal reported, citing comments from administration officials and others familiar with the situation. That would push his announcement closer to the end of the federal student loan repayment pause, which is scheduled to stop on August 31, 2022. The pause, which went into effect in March 2020, has given millions of federal student borrowers relief from student debt during the COVID-19 pandemic.
There has been speculation that Biden will implement a plan to partially forgive student loan debt, but that’s far from a sure thing. Many lawmakers oppose such a move, and even those who support it can’t agree on what form it should take, how much should be forgiven or who should qualify.
If Biden does decide to cancel student loans on a wide scale, the most likely amount would be $10,000 per eligible student loan borrower, Forbes reported. The president supported this amount during the 2020 election campaign and has shown little interest since then in canceling larger amounts.
Canceling $10,000 per borrower would cost the government about $321 billion and completely forgive the loans of about one-third of student loan borrowers, CNBC reported. But because the average education debt balance is about $30,000, lawmakers such as Senate Majority leader Chuck Schumer (D-N.Y.), Sen. Elizabeth Warren (D-Mass.) and other Democrats are pushing Biden to cancel at least $50,000 per borrower.
The NAACP also supports a higher amount because many Black student loan borrowers owe much more than $10,000 in student loan debt.
No matter the amount, Biden is sure to face pushback from Republicans and others who oppose forgiving student loans at all. The opposition is particularly fierce from those who have either paid off their loans in full or never attended college.
Another sticking point is who should be eligible for forgiveness. As Forbes noted, the Biden administration has floated the idea of income caps that would require borrowers to earn below a certain income threshold to qualify. Warren’s legislative proposal would limit student loan forgiveness to borrowers who earn $125,000 a year or less.
Meanwhile, some observers have voiced concern that a large-scale forgiveness program would be difficult to implement because the federal government lacks the necessary infrastructure to ensure a smooth operation.
“While some kind of debt forgiveness plan sounds like a godsend to anyone mired in debt, without impeccable communication between the government and borrowers, and an investment in the technological infrastructure to support such a massive program, the rollout will likely be chaotic,” Bobby Matson, CEO of debt management fintech Payitoff, told GOBankingRates in an email statement.
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