Student borrowers anxiously awaiting President Joe Biden’s decision on whether to cancel their debt may need to calm down for a few more months. It could be late summer before the White House releases an announcement — if there is one.
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Biden is expected to delay his announcement until at least July or August, the Wall Street Journal reported, citing comments from administration officials and others familiar with the situation. This would bring his announcement closer to the end of the federal student loan repayment pause, which is scheduled to end on August 31, 2022. The pause, which took effect in March 2020, relieved millions of federal student borrowers from the student debt. during the COVID-19 pandemic.
There has been speculation that Biden will implement a plan to partially forgive student loan debt, but that’s far from a sure thing. Many lawmakers oppose such a move, and even those who support it can’t agree on what form it should take, how much should be forgiven or who should qualify.
If Biden decides to cancel large-scale student loans, the most likely amount would be $10,000 per eligible student borrower, Forbes reported. The president backed that amount during the 2020 election campaign and has shown little interest in canceling larger amounts since then.
Canceling $10,000 per borrower would cost the government about $321 billion and completely forgive loans for about a third of student borrowers, CNBC reported. But since the average education debt balance is about $30,000, lawmakers such as Senate Majority Leader Chuck Schumer (DN.Y.), Sen. Elizabeth Warren (D-Mass.) and other Democrats are pushing Biden to write off at least $50,000 per borrower.
The NAACP also supports a higher amount because many black student borrowers owe much more than $10,000 in student debt.
Whatever the amount, Biden is sure to face backlash from Republicans and others who oppose student loan forgiveness. Opposition is particularly fierce from those who have paid off their loan in full or who have never attended college.
Another sticking point is who should be eligible for forgiveness. As Forbes noted, the Biden administration floated the idea of income caps that would require borrowers to earn below a certain income threshold to qualify. Warren’s legislative proposal would limit student loan forgiveness to borrowers who earn $125,000 a year or less.
Meanwhile, some observers have expressed concern that a large-scale pardon program would be difficult to implement because the federal government lacks the infrastructure to ensure it runs smoothly.
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“While some sort of debt cancellation plan seems like a godsend for anyone mired in debt, without flawless communication between government and borrowers, and investment in the technology infrastructure to support such a program massive, the rollout is likely to be chaotic,” Bobby Matson, CEO of lending fintech Payitoff, told GOBankingRates in an email.
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