Biden Announces Unprecedented Mass Student Debt Cancellation
President Joe Biden on Wednesday announced he would soon deliver on his campaign promise to provide $10,000 in taxpayer-funded student debt cancellation for many Americans.
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.
The president shared the outline of his plan in a tweet late Wednesday morning, promising details would come later in the day.
In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023.
I’ll have more details this afternoon. pic.twitter.com/kuZNqoMe4I
— President Biden (@POTUS) August 24, 2022
Biden also was set to announce a pause on federal student loan payments — scheduled to expire Aug. 31 — would be extended through the end of 2022.
If his plan survives legal challenges that are almost certain to come, it could offer a windfall to many voters 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 action is unlikely to thrill any of the factions that have been jostling for influence as the Biden administration weighs how much debt to cancel and for whom.
The president has faced pressure from liberals to provide broader debt relief 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.
Wednesday’s announcement was set for the White House after Biden returns from vacation in Rehoboth Beach, Delaware. The administration had briefly considered higher education schools in the president’s home state for a larger reveal but scaled back its plans.
During the 2020 presidential campaign, Biden was initially skeptical of student loan debt cancellation as he faced off against more extreme left-wing candidates for the Democratic nomination. Sens. Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont had proposed cancellations of $50,000 or more.
As he tried to shore up support among younger voters and prepare for a general election battle against President Donald Trump, Biden unveiled his initial proposal for debt cancellation of $10,000 per borrower, with no mention of an income cap.
Biden narrowed his campaign promise in recent months by embracing the income limit as soaring inflation took a political toll and as he aimed to head off political attacks that the cancellation would benefit those with higher take-home pay.
Republicans see a political upside if Biden pursues a large-scale cancellation of student debt ahead of the November midterm elections, anticipating a backlash for Democrats — particularly in states where there are large numbers of working-class voters without college degrees.
The Republican National Committee on Tuesday blasted Biden’s expected announcement as a “handout to the rich,” noting it would unfairly burden lower-income taxpayers and those who have already paid off their student loans with covering the costs of higher education for the wealthy.
There is no such thing as student loan forgiveness—this is a bailout, paid for by the large majority of Americans who never went to college or who responsibly paid off their debts.
— Tom Cotton (@SenTomCotton) August 24, 2022
Critics of broad student debt forgiveness also believe it will open the White House to lawsuits, on the grounds that Congress has never given the president the explicit authority to cancel debt on his own.
Meanwhile, Democrats, from members of congressional leadership to those facing tough re-election bids this November, have pushed the administration to go as broad as possible on debt relief.
The frenzied last-minute lobbying continued Tuesday even as Biden remained on his summer vacation.
Senate Majority Leader Chuck Schumer of New York, one of the loudest advocates in recent years for canceling student loan debt, spoke privately on the phone with Biden, imploring the president to forgive as much debt as the administration can, according to a Democrat with knowledge of the call.
In his pitch, Schumer argued to Biden that doing so was the right thing morally and economically, said the Democrat, who asked for anonymity to describe a private conversation.
Democrats are hoping that Biden, who has seen his public approval rating tumble since he took office, can help motivate younger voters to the polls in November with the announcement.
Although Biden’s plan is narrower than what he initially proposed during the campaign, “he’ll get a lot of credit for following through on something that he was committed to,” said Celinda Lake, a Democratic pollster who worked with Biden during the 2020 election.
She described student debt as a “gateway issue” for younger voters. A survey of 18- to 29-year-olds conducted by the Harvard Institute of Politics in March found that 59 percent of those polled favored debt cancellation of some sort — whether for all borrowers or those most in need. However, student loans did not rank high among issues that most concerned people in that age group.
Insane – and illegal!
We have the highest inflation in 40 years/highest gas prices ever, but Biden wants to spend even more at the expense of hard-working Americans.
The middle class will be stuck with the bill – it’s debt transfer.
This is just a Hail Mary before midterms. https://t.co/tJi6yoiztU
— Senator Ted Cruz (@SenTedCruz) August 24, 2022
Some advocates were already bracing for disappointment.
“If the rumors are true, we’ve got a problem,” Derrick Johnson, the president of the NAACP, which has aggressively lobbied Biden to take bolder action, said Tuesday.
“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 vote to once again save democracy in 2020.”
Meanwhile, Biden’s elongated deliberations on extending the pause in student loan payments have sent federal loan servicers, who have been instructed to hold back billing statements while Biden weighed a decision, grumbling.
Industry groups had complained that the delayed decision — coming just one week before the pause was set to expire — left them with little time to notify borrowers, retrain customer service workers and update websites and digital payment systems, said Scott Buchanan, executive director of the Student Loan Servicing Alliance.
It increases the risk that some borrowers will inadvertently be 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 just turn on a dime with 35 million borrowers who all have different loan types and statuses.”
The Western Journal has reviewed this Associated Press story and may have altered it prior to publication to ensure that it meets our editorial standards.
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