Following more than a year of internal White House debate, the president is set to announce later Wednesday that he will cancel $10,000 in federal student loan debt for borrowers making under $125,000.
In addition, those who receive federal Pell Grants and make less than $125,000 a year would be eligible for total forgiveness of up to $20,000, some of the people said.
The forgiveness applies to students with federal loans from both undergraduate and graduate programs, as well as Parent Plus loans, one of the people said. While debt forgiveness is often treated as income for tax purposes, the canceled student debt will be exempt, like some other federal student debt forgiveness programs.
Mr. Biden is also planning to announce an extension of the pandemic pause on student loan payments through the end of this year, the people said. Loan payments were set to resume for millions of borrowers after Aug. 31.
A plan to forgive around $10,000 of student debt for borrowers who make under $125,000 a year or around double that for married couples would include the vast majority of the 40 million people with student debt. The action could render up to 15 million borrowers whose balances are under $10,000 entirely free of student debt.
The provision for Pell Grant recipients would likely push that number higher, as around 7 in 10 borrowers with any federal loans also received a Pell Grant. Pell Grant recipient graduates have about $4,500 more in debt than other graduates, according to a 2020 analysis of federal data by the Institute for College Access and Success, an advocacy group.
Pell Grants are a form of federal financial aid for undergraduate students.
The White House didn’t immediately respond to a request for comment on the details of the coming announcement.
Republican lawmakers quickly criticized the idea. “Who will have to pay for Biden’s debt transfer scam? Hard-working Americans who already paid off their debts or never took on student loan debt in the first place,” House Minority Leader Kevin McCarthy (R., Calif.) wrote on Twitter.
The coming announcement brings to a close a fierce debate within the administration over how to approach student loans.
The president himself had long been skeptical of using his executive authority to forgive debt. He raised concerns in internal meetings that the measure could benefit wealthy people and instructed his staff to impose an income cap so the benefits didn’t flow to individuals making lucrative salaries, according to administration officials and others familiar with the discussions.
Political | Process 