September 28, 2022

Biden to cancel millions of student loans by $10K, $20K for Pell Grant recipients

Several people familiar with the administration’s deliberations stressed that Biden had not made a final decision on key parts of the debt relief plan by Tuesday evening. The president left his vacation home in Rehoboth Beach Wednesday morning to return to the White House in anticipation of an announcement.

Senate Majority Leader Chuck Schumer, a leading proponent of student loan cancellation, urged Biden to provide as much relief as possible to borrowers during a phone call with the president Tuesday evening, according to a Democrat familiar with the discussion.

Debt cancellation is “the right thing to do both morally and economically,” Schumer told Biden in his final pitch.

The call followed a discussion by senior White House officials, including chief of staff Ron Klein, with Schumer and Sens. Elizabeth Warren (D-Mass.) and Raphael Warnock (D-Ga.), the leaders of the Biden campaign. He must cancel student loan debt since his inauguration.

Eleventh-hour debates on debt relief have seen the White House eyeing a self-imposed deadline to resolve the issue. The pandemic-related ban on interest and payments, which was extended four times by Biden beginning in March 2020 under the Trump administration, expires on August 31.

Progressives, civil rights groups and labor unions have all urged the Biden administration to offer large amounts of loan forgiveness — up to $50,000 — to borrowers. And they expressed their disappointment on Tuesday at any policy that would stop the relief.

Derrick Johnson, president of the NAACP, made it clear that $10,000 in loan relief per borrower will not be enough to address racial disparities in student loan debt. “If the rumors are true, we have a problem,” Johnson said in a statement.

“President Biden’s decision on student loans cannot be the latest example of a policy that has left black people — especially black women — behind,” she added. “This is not how you treat black voters who cast 90 percent of registered voters to save democracy in 2020.”

The administration is widely expected to at least extend the student loan freeze to avoid tens of thousands of borrowers receiving bills before the midterm elections. A broad swath of congressional Democrats have urged the White House to extend the freeze at least through the end of the year.

The White House has been fighting over student loan cancellation for more than a year. During his campaign, Biden promised to forgive all federal student loan borrowers up to $10,000, and came under heavy pressure from progressives to stick to that pledge.

Several key areas of the student loan cancellation program appear to be undecided, including which loans and which borrowers will qualify. White House officials have discussed the $125,000 income limit as a way to blunt criticism that the amnesty policy favors higher earners.

Education officials are awaiting a final decision from the White House Biden has made plans to implement whatever he ultimately decides. The department is exploring ways to automatically disburse as much relief as possible without requiring borrowers to fill in an application form.

The White House declined to comment Tuesday on its plan for debt relief.

The White House’s intransigence has frustrated progressives and other groups, urging Biden to go as big as possible on broad debt relief for tens of thousands of people before heading to the polls this fall.

Uncertainty about whether monthly payments will resume provoked severe criticism From loan servicing agencies that administer federal student loans.

The Student Loan Servicing Alliance, which represents federal student loan servicers, The Education Department issued a warning on Monday Management instability risks “operational disruptions” to the reimbursement system.

Education department officials have asked lenders to hold off on sending bills to borrowers for repayment in September. But companies say the uncertainty around the deadline is pushing the reimbursement system to the brink of major problems. Even if the administration decides to extend the relief, it also includes the possibility that automated messages may send false information to borrowers.