When will President Joe Biden make a decision over student loan forgiveness?
President Biden said in late April that he would announce his plan to cancel student loan debt in a couple weeks. Six weeks on borrowers are still waiting.
An announcement from President Biden on his plans to cancel student loan debt was expected at the end of May, but the tragic school shooting in Uvalde, Texas forced a change of plans. According to The Wall Street Journal, White House officials say that the announcement on forgiveness is likely to come this summer, sometime in July or August.
The more than 43 million Americans with student loan debt have been anxiously awaiting what the president will decide with moratorium on payments set to expire 1 September. A report from the Consumer Financial Protection Bureau in April warned that millions could be at risk of delinquency or default when payments restart which have been frozen since March 2020.
What has President Biden said about student loan debt forgiveness?
During his run for the presidency, then-candidate Biden talked about forgiving a minimum of $10,000 per borrower of federal student loan debt. He has resisted calls from his Democratic colleagues in Congress to erase all student debt or cancel at least $50,000 per person.
“I am not considering $50,000 debt reduction, but I’m in the process of taking a hard look at whether or not there will be additional debt forgiveness,” Biden told reporters in late April. Although his decision didn’t come in the two-week timeframe he gave at the time, a report in the Washington Post said that he had hoped to unveil his plan at the University of Delaware commencement at the end of May.
According to the report, three people familiar with the situation said he was considering canceling up to $10,000 but limit access to the relief. Only single borrowers earning less than $150,000 a year, or less than $300,000 for married couples filing jointly would be eligible for the federal loan debt forgiveness.
Still, that would cover an estimated 97 percent of borrowers according to 2019 data. The plan would cost roughly $230 billion, but the officials cautioned that some details could change before the decision was made official.
Millions could struggle to pay back loans when moratorium ends
The Consumer Financial Protection Bureau put out a report in April that found millions who have student loan will be at risk of financial calamity when repayments begin in September. Prior to the pandemic, nearly a quarter of borrowers were in delinquency or default when the pause was put into place.
The analysis looked at five potential risk factors for roughly 34 million borrowers, around 80 percent of the total. The agency estimates that 15 million borrowers have at least one of these risk factors, and more than 5 million borrowers have two or more such risk factors.
There could be concern about their ability to pay off other debts that they have as well. Before the pandemic six percent were past due on some other form of credit that they had taken on. This improved during the freeze on student loan payments but “does not necessarily mean they will be better prepared” once they need to make payments on their student loans. Especially as pandemic assistance programs have ended.