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WASHINGTON — The White House is reportedly planning to cancel $10,000 in student debt per borrower, making good on a promise President Joe Biden made during the 2020 campaign.
Debt forgiveness has been a recurring topic throughout the first year and a half of Biden's presidency. Some Democrats and activists have been pushing for even more forgiveness, while conservatives — including Sen. Mitt Romney, R-Utah — dismiss the idea.
How soon will the White House decide? Biden initially hoped to make the announcement this weekend, but that has been delayed after the Robb Elementary School shooting in Uvalde, Texas, on Tuesday, according to The Washington Post.
- The White House denied the reports, telling Reuters: "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," White House spokesman Vedant Patel continued. The latest pause on student loan interest and payments is set to expire at the end of August.
Who would benefit? The latest plans don't offer blanket forgiveness, instead limiting eligibility to Americans who earn less than $150,000 a year, or less than $300,000 for couples filing jointly, The Washington Post reports.
- That would still benefit most borrowers, as an estimated 97% of all student debt is held by people who fall below those thresholds.
- The Washington Post estimates that 53% of borrowers currently owe less than $20,000, but there are more than 3 million borrowers with loan balances of more than $100,000, according to CNBC.
- More than 40 million Americans have student loan debt, with a total outstanding balance of $1.7 trillion. Eliminating $10,000 in student debt per borrower would cost $321 billion, according to the New York Federal Reserve, and would completely forgive loans for about one third of borrowers.
What to plan for: Borrowers may hope for relief, but Biden's latest plan could change significantly or be scrapped entirely, so experts warn borrowers should have a plan in place in the event that loans go back into repayment mode at the end of August.
Forbes recommends refinancing existing loans or enrolling in income-driven payment plans if you're having trouble making regular payments.
They also suggest avoiding student loan forbearance, which can lead to higher interest.