President Biden set to announce form of student loan forgiveness: sources

As another deadline approaches for restarting payments for the $1.7 trillion in US federal student loans, President Joe Biden is poised to decide whether to cancel debt for a subset of ‘Americans and continue to maintain a pandemic-era pause on refunds — a sweeping move he’s openly weighed in in one form or another since becoming a candidate.

Without action, many Americans will have to – for the first time in two years – start repaying their student loans on September 1.

But several people familiar with White House policy discussions told ABC News that the loan pause, first put in place under President Donald Trump during the disruptions of the outbreak of COVID-19, should be extended. . Debt cancellation talks, which were still ongoing on Tuesday, have so far resulted in a rebate of around $10,000 to people earning less than $125,000 a year – although details are yet to be heard. in development.

An announcement on federal student loans could come as early as Wednesday, sources familiar with the plan said.

In an interview on Tuesday afternoon, US Secretary of Education Miguel Cardona told ABC News that the much-awaited decision on loan cancellation would come “soon,” but remained vague on specifics.

“We recognize that this is a significant issue for many families. And we want to make sure they get the information directly from the president,” Cardona said.

The White House did not confirm any further details, saying only that the president would have more to say on the matter before August 31.

“As a reminder, no one with a loan held by the federal government has had to pay a single penny in student loans since President Biden took office, and this administration has already forgiven approximately $32 billion in debt for more of 1.6 million Americans – more than any administration in history,” White House spokesman Abdullah Hasan said, referring to debt relief for people who went in fraudulent universities and a restructured program to cancel the debt of people who have worked in the public service for 10 years.

But more specific details about how much money will be forgiven and for which are in high demand for the more than 45 million Americans who still have federal student loan debt.

A third of federal borrowers have less than $10,000, meaning they could see their debts wiped out completely if this policy goes through. Another 20% of borrowers, or about 9 million people, would see their debt at least halved.

PHOTO: Activists attend a rally outside the White House to call on US President Joe Biden to cancel student debt in Washington, July 27, 2022.

Activists attend a rally outside the White House to call on US President Joe Biden to cancel student debt in Washington, July 27, 2022.

Anna Moneymaker/Getty Images

Such a significant override may seem like a big leap for Biden to take without Congress, but legal and policy experts say it’s clearer: This decision would be well within the president’s purview — it simply doesn’t. not been used before due to political implications. .

“The president has quite broad authority under the Higher Education Act,” said John Brooks, a law professor at Fordham University who focuses on federal fiscal policy.

“A lot depends on the size of the cancellation. The smaller the cancellation amount, the easier the question,” Brooks said. “Erasing all student debt at once might be more difficult, but the President, through the Secretary of Education, has the power to adjust the amount of loan principle available to any borrower.”

Still, Biden could be taken to court — perhaps by lending agencies forfeiting revenue or by members of Congress who may believe Biden is spending money in a way that has not been appropriated by officials. legislators.

Outside experts also question how long the processes would take to cancel student loans once a policy is announced – and how complicated it would be for borrowers to navigate, details that have yet to be released. published.

Some worry that people will fall through the cracks if debt forgiveness applications become too cumbersome due to the potential income cap.

“The White House is about to ask the Department of Education to do something extraordinarily difficult, and it will have the effect of denying debt relief to low-income people, economically vulnerable people, who have the hardest time navigating these complicated processes,” Mike Pierce, executive director and co-founder of the Student Borrower Protection Center, a think tank that advocates for universal debt forgiveness, told ABC News. in an interview.

Pierce and other proponents of more gradual debt cancellation, including the NAACP, said the smoothest path would include full, universal cancellation for all.

“If the rumors are true, we have a problem. And tragically, we’ve been through this so many times before,” NAACP President Derrick Johnson said in a statement on Tuesday, reacting to details of the potential news announcement. politics.

“President Biden’s decision on student debt cannot become the latest example of a policy that has left black people – especially black women – behind. This is not how you treat black voters who have returned in record numbers and provided 90% of their vote to save democracy once again in 2020,” Johnson said.

But for many borrowers and student debt forgiveness advocates — especially the half of people with federal student loans who would see their debt extinguished or significantly reduced — Biden’s policies would still be cause for concern. major celebration and would be seen as a beginning of reform. the college and university system, where rising costs have become a major area of ​​concern.

For Michigan teacher Nick Fuller, a possible Biden announcement on student loans could come just before the winter financial meltdown, when his heating bills soar.

Although Fuller worked hard his early years out of school to pay off his school debt and then had his loan frozen for much of the pandemic, he fears restarting payments on top of monthly living expenses will end it.

“I think things are going to get really tough in the winter because my utility bills are higher,” Fuller told ABC News. “I mean for January and February – the highs are zero and the lows are -20 [degrees] for nearly two months.”

The freezing temperatures could sting a little less if Biden forgives $10,000 of Fuller’s remaining student loan bills, he said.

“That’s about two-thirds of the debt I have left,” he said.

It would make payments “much more affordable and much more manageable in my situation,” he said.

Easing the student debt crisis — which is also how Trump Education Secretary Betsy DeVos described the problem in 2018 — could also contribute to a crippling teacher shortage that has caused thousands of vacancies at the start of the last school year, which Fuller saw. himself.

PHOTO: President Joe Biden in the East Room of the White House in Washington, August 9, 2022.

President Joe Biden in the East Room of the White House in Washington on August 9, 2022.

Evelyn Hockstein/Reuters, FILE

Falling wages and rising inflation have made many teachers nervous as the loan cancellation deadline approaches.

And because black students are among the group of people who go into debt fastest, proponents argue that canceling some student loans could also begin to address racial inequities.

Shareefah Mason, Dean of Educator Certification at Dallas College, feels that impact firsthand as a black woman in debt. She leads the learning component of a program that pairs students with residency partners to ensure they earn while they learn, effectively reducing education debt for prospective teachers.

“I’m carrying the weight of $70,000 in student loans,” Mason told ABC News. “The data shows that student loan debt has an exponential and disproportionate impact on black women.”

The average amount of student debt accumulated by black women is higher than any other group at $38,800, according to Education Trust, a nonprofit focused on education reform.

But Mason’s program, the first-ever full-time paid teacher’s apprenticeship in the state of Texas, allows students to earn one of the cheapest bachelor’s degrees in the state, Mason said.

The goal, she said, is to help future educators break down the generational barriers she faced as a black woman.

Mason said “they won’t have to worry about student debt,” which could open more doors for minority communities that historically can’t afford higher education. “My students will be able to earn, as a first-year teacher in the city of Dallas, over $60,000,” Mason said.

For the nation’s most affected borrowers, Mason said, “there needs to be space created for them to earn enough money to pay their student loans without having to sacrifice their ability to build generational wealth for their families.” .

ABC News’ Mariam Khan and Benjamin Siegel contributed to this report.

Leave a Comment