Millions of Americans were waiting to learn the fate of their federal student debt on Wednesday as President Joe Biden prepared to make good on his campaign promise to provide up to $10,000 in debt cancellation.
Details of the plan have been closely guarded, but borrowers making less than $125,000 a year would be eligible for loan forgiveness, according to three people familiar with the decision. Biden is also set to extend a pause on federal student loan payments through January.
If he survives the legal challenges that are sure to come, Biden’s plan could offer a windfall to a swath of the nation in the run-up to this fall’s midterm elections. More than 43 million owe a combined federal student debt of $1.6 trillion, with nearly a third owing less than $10,000.
Still, the action is unlikely to excite any factions vying for influence as Biden weighs how much to cancel and for whom.
The continuation of the pandemic-era payment freeze comes just days before millions of Americans were set to find out when their following student loan bills would be due. This is the closest the administration has come to hitting the end of the payment freeze extension, with the current pause set to end on Aug. 31.
Wednesday’s announcement was set for the White House after Biden returns from vacation in Rehoboth Beach, Delaware. The administration had briefly considered higher education schools in the president’s home state for a larger reveal but scaled back their plans.
During the 2020 presidential campaign, Biden was initially sceptical of student loan debt cancellation as he faced off against more progressive candidates for the Democratic nomination. Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., had proposed cancellations of $50,000 or more.
As he tried to bolster support among younger voters and prepare for a general election battle against President Donald Trump, Biden unveiled his initial debt cancellation proposal of $10,000 per borrower without mentioning an income cap.
Biden lowered his campaign promise in recent months by adopting the income cap, as runaway inflation took a political toll. His goal was to avoid political attacks that would benefit those with higher take-home pay. But Democrats, from members of the congressional leadership to those facing tough re-election bids this November, have pushed the administration to be as broad as possible on debt relief, seeing it in part as a heartthrob.
The frantic last-minute lobbying continued Tuesday even as Biden was still on his summer vacation. Senate Majority Leader Chuck Schumer, D-New York, one of the most vocal advocates in recent years for cancelling student loan debt, spoke privately with Biden, imploring the president to forgive as much debt as possible. the administration may, according to a Democrat with knowledge of the call.
In his introduction, Schumer argued to Biden that doing so was morally and economically correct, said the Democrat, who requested anonymity to describe a private conversation.
Inside the administration, officials have discussed since at least early summer forgiving more than $10,000 of student debt for specific categories of borrowers, such as Pell Grant recipients, according to three people with knowledge of the deliberations. That remained one of the final variables Biden considered before Wednesday’s announcement.