The Biden administration is reportedly weighing wiping out $10,000 or more in debt for student borrowers.
Liberal activist groups and congressional Democrats have been clamoring for President Joe Biden to cancel a significant portion of federally held student loans since he took office in January 2021, and the White House is now working on plans for student loan forgiveness starting at $10,000 per borrower, according to Bloomberg.
The administration has hinted in recent weeks that it is working on a plan to forgive some federally held student loan debt prior to the midterm elections in November while dismissing fears that such a move could contribute to high inflation.
BIDEN TEASES FINAL ANSWER ON STUDENT LOAN DEBT IN NEXT ‘COUPLE OF WEEKS’
On Thursday, Biden said he was “considering dealing with some debt reduction” but added that he was not considering forgiving up to $50,000 per borrower as called for by many Democrats, including Senate Majority Leader Chuck Schumer.
“I am not considering $50,000 debt reduction, but I’m in the process of taking a hard look at whether or not there are going to be additional debt forgiveness, and I’ll have an answer on that in the next couple of weeks,” the president said.
White House press secretary Jen Psaki likewise told reporters on Thursday that “finding ways to provide relief to students to make sure that these working-class, working families are getting relief is more important than tax cuts to millionaires, billionaires, and corporations.”
“The way that inflation impacts people across the country is costs, right?” she added. “What we’re talking about here is how to provide people with relief or how we can provide them with relief or consider providing them with relief so that they have more money to spend on things in their lives.”
While the Biden White House, which has faced low approval in public opinion polls for months, sees student loan forgiveness as an easy political victory as the Democratic party tries to hold on to slim majorities in Congress in the midterm elections, the policy has faced bipartisan criticism, with many noting the unfair nature of such a blanket loan forgiveness.
Larry Summers, who served as secretary of treasury in the Obama administration, called student loan forgiveness a “regressive” action because low-income people are less likely to have taken out loans.
Furthermore, student loan forgiveness would add further to the federal deficit, dispersing the cost of the loans to all taxpayers, the majority of whom do not have federal student loan debt.
Forgiving $10,000 in student loans would eliminate over a quarter of the average borrower’s loan balance of $36,510.
A 2021 report by the Brookings Institution showed that the median household income for student loan borrowers is over $75,000 per year, while the median income of those making regular monthly payments is over $85,000 per year.
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“Beneficiaries of across-the-board student loan forgiveness would be higher income, better educated, and more likely to be white than beneficiaries of just about all other programs designed to reduce hardship and promote opportunity and targeted to those who need help,” the report said.
