WASHINGTON — US President Joe Biden is expected to announce Wednesday that he will forgive $10,000 in student loan debt for millions of borrowers who fall below an income cap, according to people familiar with the plan.
After months of weighing the executive’s action, the president is set to reveal his long-awaited decision after returning to the White House from a vacation in Rehoboth Beach, Delaware. The action is also expected to include extending until January a pause on federal student loan payments – implemented during the coronavirus pandemic – which is set to expire at the end of this month.
The White House would not confirm the upcoming announcement, first reported by The Associated Press.
The president said he would make a decision by August 31. Biden is facing growing pressure from progressive Democrats to write off even more of the debt of Americans who have taken out federal loans to pay for their education. But some Democratic economists, including former Treasury Secretary Larry Summers, worry about the risk of debt cancellation exacerbating 40-year high inflation.
Sequel: Biden carefully considers student loan debt forgiveness, but less than $50,000
What the president plans
The White House has focused on a plan that would forgive $10,000 of student loan debt per eligible borrower, sources said, matching a figure Biden campaigned on. The White House has also discussed extending relief beyond $10,000 for borrowers who meet certain criteria, a source said.
Debt forgiveness would be limited to borrowers with household incomes of $125,000 or less and would only apply to people with federal loans, not private ones.
More than 43 million people have federal student loan debt in the United States, and the average borrower has about $37,000, according to data compiled by the Education Data Initiative. The outstanding federal loan balance is approximately $1.6 trillion.