According to several people familiar with the plans, President Joe Biden is expected to make the announcement on Wednesday regarding the forgiveness of up to $10,000 in student loan debt for millions of people and up to $20,000 in debt for low- and middle-income borrowers who have previously received a Pell grant.
Borrowers who make less than $125,000 or households that make less than $200,000 annually will only be eligible for the loan relief. The White House also intends to "finally" extend the freeze on interest and monthly payments through December 31.
The Education Department is already working on a proposal to develop a more generous income-driven repayment scheme, which the White House will also promote. The plan is expected to reduce borrowers of undergraduate student loans' monthly payments in half.
It was highlighted by several sources with knowledge of the administration's conversations that as of late Tuesday night, Biden still hadn't made up his mind about important aspects of the debt relief program. On Wednesday morning, the president left his vacation home in Rehoboth Beach, Delaware, and headed back to the White House in anticipation of a statement.
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According to a Democrat familiar with the conversation, Senate Majority Leader Chuck Schumer, a strong supporter of canceling student debt, pressed Biden to offer as much assistance to borrowers as possible during a phone call with the president on Tuesday night.
In his final plea, Schumer informed Biden that eliminating debt is "the right thing to do morally and economically," according to the Democrats.
Senior White House staff members, including chief of staff Ron Klain, had a conversation with Schumer, Sens. Elizabeth Warren (D-Mass.), and Raphael Warnock (D-Ga.), who has been leading the charge to persuade Biden to forgive student loan debt ever since he took office.
The White House is facing a self-imposed deadline for taking action on the debt crisis, which has prompted last-minute discussions for debt relief. The moratorium on interest and payments connected to the outbreak, which began in March 2020 under the Trump administration and has been extended by Biden four times, is scheduled to end on August 31.
Progressives, civil rights organizations, and labor unions have all encouraged the Biden administration to offer substantial loan forgiveness to everyone, up to $50,000 per borrower. And on Tuesday, they expressed their dissatisfaction with any proposal that falls short of comprehensive assistance.
Derrick Johnson, president of the NAACP, stated unequivocally that racial disparities in student loan debt could not be addressed with a debt relief program of $10,000 per borrower. If the rumors are accurate, Johnson stated in a statement, "We've got a problem."
He continued, "President Biden's decision on student debt cannot be the most recent illustration of a program that has failed Black people, especially Black women. This is not how you should treat Black people, who participated in record-breaking voting turnout in 2020 and contributed 90% of the vote.
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To avoid sending payments to tens of millions of borrowers right before the midterm elections, it is widely anticipated that the administration will, at the very least, extend the student loan moratorium. A wide swath of congressional Democrats has urged the White House to continue the freeze until at least the end of the year.
The cancellation of student loans has been a source of contention for the White House for more than a year. Biden made the commitment to cancel up to $10,000 of federal student loan debt for all borrowers during his campaign, and he has come under intense criticism from progressives to keep that promise.
The student debt cancellation plan's major components, including which loans and debtors would be eligible, look to be in flux in many cases. White House officials have discussed a $125,000 income cap as a means to address criticism that the forgiveness scheme benefits those with higher incomes.
In anticipation of the White House making a final decision, officials at the Education Department have created plans to carry out whatever Biden decides. The department is looking for ways to automatically offer as much relief as feasible without requesting any information from debtors.
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On Tuesday, the White House declined to comment on its debt relief strategies.
Progressives and other organizations pressing Biden to go as far as possible on sweeping debt relief to tens of millions of people before they travel to the polls this fall are disappointed by the White House's reluctance.
The uncertainty around whether monthly payments were going to restart also sparked sharp criticism from the loan servicing companies that manage federal student loans.
The Education Department was alerted by the Student Loan Servicing Alliance, which represents federal student loan servicers, on Monday that the administration's inaction ran the risk of "operational interruptions" to the repayment system.
Officials from the Education Department had previously instructed loan servicers to postpone sending borrowers bills regarding their payments starting up again in September. However, the businesses assert that the payments system is on the verge of breaking down due to the uncertainties so close to the deadline. This includes the chance that automated communications could inadvertently provide borrowers with inaccurate information in the upcoming days, even if the administration chooses to extend the relief.
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