Biden set to write off $10,000 in student debt for millions, $20,000 for Pell grant recipients

Several people familiar with the administration’s discussions pointed out that Biden had not made a final decision on key elements of the debt relief package Tuesday night. The president left his vacation home in Rehoboth Beach, Del., Wednesday morning to return to the White House ahead of an announcement.

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

Schumer told Biden in his final speech that debt cancellation is “the right thing to do morally and economically,” the Democrat said.

The call follows a discussion senior White House officials, including Chief of Staff Ron Klain, had with Schumer and Sens. Elizabeth Warren (D-Mass.) and Raphael Warnock (D-Ga.), leaders of the effort to convince Biden to forgive student loan debt since he took office.

Eleventh-hour deliberations on debt relief come as the White House sets a self-imposed deadline to address the issue. The pandemic-related interest and payment moratorium, which began in March 2020 in the Trump administration and was extended four times by Biden, is set to expire on August 31.

Progressives, civil rights organizations and labor unions have all urged the Biden administration to provide large amounts — up to $50,000 per borrower — in loan forgiveness at all levels. And they signaled on Tuesday their disappointment with any policy that stops short of sweeping relief.

Derrick Johnson, president of the NAACP, made it clear that $10,000 in debt relief per borrower would be insufficient to address racial inequities in student loan debt. “If the rumors are true, we have a problem,” Johnson said in a statement.

“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 added. “This is not how you treat black voters who turned out in record numbers and provided 90% of their votes to save democracy again in 2020.”

The administration is widely expected to extend, at a minimum, the student loan freeze to prevent tens of millions of borrowers from receiving bills just before the midterm elections. A wide range of congressional Democrats have urged the White House to continue the freeze until at least the end of the year.

The White House has been wrestling with the question of canceling student debt for more than a year. During his campaign, Biden pledged to forgive all federal student loan borrowers up to $10,000 and came under immense pressure from progressives to deliver on that pledge.

Many of the key elements of the student debt forgiveness plan appear to be undecided, including which loans and borrowers would qualify. White House officials have debated a $125,000 income cap as a way to blunt criticism that a pardon policy helps top earners.

Education Department officials, pending a final decision from the White House, have hatched plans to implement whatever Biden ultimately decides. The ministry has been exploring ways to automatically provide as much relief as possible without requiring borrowers to fill out an application form.

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

The White House’s indecision has frustrated progressives and other groups urging Biden to go as far as possible on widespread loan relief to tens of millions of people before heading to the polls this fall.

Uncertainty over whether monthly payments would restart has also aroused strong criticism from loan servicing companies that service federal student loans.

The Student Loan Servicing Alliance, which represents federal student loan servicers, warned the Ministry of Education on Monday that the administration’s indecision risked “disrupting the functioning” of the reimbursement system.

Ministry of Education officials have already told loan officers to suspend sending bills to borrowers about resuming their payments in September. But companies say the uncertainty so close to the deadline is pushing the reimbursement system to the brink of major problems. This includes the possibility of automated messages sending incorrect information to borrowers in the coming days, even if the administration decides to extend the relief.

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