White House says no decision made on student loan forgiveness

Report said Biden administration was to forgive $10,000 in student debt depending on income

A University of California campus. The current pause in student debt interest and payments due to Covid-19 expires at the end of August. AP
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US President Joe Biden's administration has not made a final decision on student loan cancellation, a White House representative said on Friday, after a news report claimed the president was planning to cancel $10,000 in debt per borrower.

The Washington Post report cited three people familiar with the plan, saying that the $10,000 in debt forgiveness would apply to Americans who earned less than $150,000 in the previous year or less than $300,000 for married couples filing jointly.

White House spokesman Vedant Patel said the report was inaccurate.

“No decisions have been made yet. But as a reminder, no one has been required to pay a single dime of student loans since the president took office,” he told Reuters.

The current pause in student debt interest and payments due to Covid-19 expires at the end of August.

The sources, who were not identified, told the newspaper that details could change.

A study by New York Federal Reserve economists showed that forgiving $10,000 per student would amount to $321 billion in federal student loans and eliminate the entire balance for 11.8 million borrowers, or 31 per cent.

“Administration actions have already provided more than $18.5bn in targeted debt relief to more than 750,000 borrowers,” Mr Patel said.

“Not to mention tens of billions more saved by the 41 million borrowers who have benefited from the extended student loan payment pause.”

Student debt cancellation has become a priority for many liberals and one that could shore up popularity with younger and more highly educated voters, who lean Democratic, before November's midterm congressional elections.

But the Biden administration has been reluctant to unilaterally cancel college debt owned by the US government, a move that would test his legal authority.

Instead, Mr Biden has asked Congress to pass a bill forgiving debt that he could then sign.

The federal government has allowed 43 million borrowers stop paying on a total of $1.6 trillion in student loans since the onset of the Covid-19 pandemic in 2020.

“I am considering dealing with some debt reduction,” Mr Biden told reporters on April 28.

But he said he was not considering the $50,000 debt reduction that some progressive Democrats have proposed.

Updated: May 27, 2022, 6:07 PM