So while we wait, let’s dive into what moves we can expect from Biden on this $1.7 trillion issue.
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President Biden said he’ll make his much-anticipated student loan forgiveness announcement in a couple weeks, which—same, dude, we push off answering thorny questions too.
So while we wait, let’s dive into what moves we can expect from Biden on this highly politicized, $1.7 trillion issue.
Forget about $50k. The president said he’s “considering dealing with some debt reduction,” but explicitly said it won’t be the $50,000 per borrower that progressives were pushing for. While campaigning via drive-in rallies, Biden supported $10,000 of relief per individual borrower. This would completely erase student loans for almost 12 million people, but would leave about 70% of the 40 million total borrowers with outstanding student debt.
He could opt for an income-driven overhaul. Biden has historically been skeptical of broad-based student debt relief, and his advisors have discussed focusing forgiveness on lower- to middle-income individuals. Just last week, the Department of Education promised significant changes to its broken income-driven repayment (IDR) plans that were created to help low-income borrowers.
Focus on scam schools. The Biden admin forgave $238 million in loans yesterday that had been given to students who attended the Marinello Schools of Beauty. That reflects Biden’s focus on updating the borrower defense program and making it easier for groups of students defrauded by for-profit schools to apply for loan forgiveness. But of the $18.5 billion in student debt that’s been forgiven since Biden took office, only $2 billion comes directly from updates to this program.
Zoom out: Earlier this month, Biden extended the pause on federal student loan payments through August 31. Since that moratorium was introduced in spring 2020, 37 million borrowers have saved $195 billion in loan payments, per the NY Fed. But once it’s lifted (whenever that is), the bank expects delinquencies to spike.—MM
