Is Biden still considering student loan forgiveness? Here’s what we know
(NEXSTAR) – While on the campaign trail, President Biden supported student loan forgiveness. In April, he confirmed he was considering some sort of widespread federal student debt cancellation. Now, two months later, is student loan forgiveness still on the table?
The answer is, yes, Biden is still considering debt relief. When he was asked by reporters while walking on a Delaware beach Monday if he was close to a decision on student loan forgiveness, Biden said, “Yes,” according to CNN.
Previous reports said Biden is expected to make a decision within the next two months.
Here’s what we do know about potential widespread student loan forgiveness.
It likely won’t be $50,000 per borrower
Forgiving $50,000 in student loan debt is one of the larger proposals that has been suggested by lawmakers, including Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA).
Biden, when asked in April about using executive authority to cancel student loan debt, told reporters he is not considering $50,000 in debt reduction. Multiple sources have confirmed to The Hill that Biden was considering expunging at least $10,000 per borrower.
It’s not necessarily a surprise — while on the campaign trail, Biden supported a much smaller plan of up to $10,000 in forgiveness per borrower.
There may also be an income cap on federal student loan forgiveness. Sources told The Washington Post that relief could be limited to those who make less than $125,000 or $150,000 per individual tax filers or $250,000 or $300,000 for couples who file together.
White House expects impact on inflation to be ‘quite small’
Some have argued student debt cancellation could lead to an economic boost, giving currently debt-burdened borrowers the opportunity to spend money on items they may have been holding out on, like a car or a house. That spending boost may not be ideal in the eyes of the Federal Reserve, which is trying to stabilize costs by making borrowing more expensive.
Still, some experts believe student loan forgiveness won’t have a large impact on inflation, including White House Senior Advisor Brian Deese. While speaking with reporters in May, Deese said that the economic impact of any student loan forgiveness proposal “would be across the course of years or a couple of decades.”
He added that the impact on inflation “in the near term is likely to be … quite small.”
David Lazarus, business and consumer news contributor for Nexstar’s KTLA, agreed forgiveness would have a limited impact on inflation but noted that “it could affect the Fed’s efforts to cool the economy, which would create more urgency for further rate hikes.”
Millions likely already qualify for forgiveness
Over nine million Americans may qualify for federal student loan forgiveness under a program that’s already in place, according to a recent estimate. The Student Borrower Protection Center reviewed governmental data and found millions of public service workers likely qualify for debt cancellation through the Public Service Loan Forgiveness program, but have yet to file the paperwork to start the process.
PSLF is intended to give eligible public service employees debt forgiveness after a set number of payments are made. Eligibility requirements can be found here.
Roughly 1.3 million borrowers have seen $25 billion in student debt forgiveness since Biden took office.
Thousands of borrowers have received $6.8 billion in debt cancellation “through improvements to PSLF,” according to the Education Department. Another roughly 690,000 borrowers have had a total of $7.9 billion in student loans canceled through discharges due to borrower defense and school closures. Over 400,000 borrowers have received more than $8.5 billion in debt forgiveness through total and permanent disability discharge.
Payments on federal student loans remain paused until August 31. Biden could approve another extension on the payment moratorium in light of rising interest rates, and depending on the state of the economy in August, according to the Associated Press.