White House considers $10,000 in student loan forgiveness for those who make under $125,000: report

Porquenostudios | Istock | Getty Images

The White House is considering a plan to forgive $10,000 in student debt for borrowers who make less than $125,000, according to reporting by CNN.

The Biden administration has promised to make a decision on student loan forgiveness by the end of August, when monthly loan payments are scheduled to resume after being paused for over two years as part of a pandemic-era relief policy.

It still remains uncertain how the administration will proceed, if at all, with loan cancellation.

An extension of the payment pause is also on the table, and federal student loan servicers have been instructed to hold off on sending out payment reminders to borrowers. Resuming the payments without preparing borrowers more could cause delinquency rates to spike, experts have warned.

The country’s outstanding student loan debt balance exceeds $1.7 trillion, with 40 million Americans in debt for their education. Before the pandemic, when the economy was in one of its healthiest periods, some 10 million borrowers were still behind on their payments.

Since the campaign trail, President Joe Biden has put his support behind $10,000 in student loan forgiveness, while his competitors to the left, Sen. Elizabeth Warren, D-Mass. and Sen. Bernie Sanders, I-Vt., vowed to cancel more. Warren pledged to cancel $50,000 for most borrowers and Sanders, to eliminate all of the debt.

The Washington Post has also reported that The White House is leaning toward $10,000 in cancellation. Meanwhile, the administration has looked at ways of limiting the relief to certain earners to quell criticism that student debt forgiveness is a handout to more well-off Americans.

More from Personal Finance:What a recession could mean for youBest money moves after the Fed’s interest rate hikesNearly half of all Americans are falling deeper in debt

Biden is now under intense pressure to cancel more then $10,000, including from groups like the NAACP and lawmakers such as Senate Majority Leader Chuck Schumer, D-N.Y. Wisdom Cole, national director of the NAACP’s youth and college division, recently said on Twitter that nixing just $10,000 would be “a slap in the face.”

At the same time, sweeping student loan forgiveness will also likely anger some Americans, including those who never borrowed for their education or went to college. Several Republicans have said they will try to block an effort by the president to cancel the debt. Rep. Kevin Brady, R-Texas, ranking member of the House Ways and Means Committee, recently called student loan forgiveness “a giveaway to highly educated college grads.”

Overall, though, the majority of voters (62%) support student loan forgiveness, according to a poll by Morning Consult.

White House officials did not immediately respond to a request for comment.

This is a developing story. Please check back for updates.

What's your reaction?

In Love
Not Sure

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in:News