After delay, Biden prepares student loan aid, payment suspended | Business news

WASHINGTON (AP) — President Joe Biden on Wednesday is set to announce his long-delayed move to forgive up to $10,000 in federal student loans for many Americans and extend the payment pause until January, according to three people familiar with the plan.

Biden faced pressure from liberals to provide broader relief to borrowers hit by moderates and Republicans who question the fairness of any broad forgiveness. The delaying Biden’s decision has only heightened expectations of what his own aides admit is a political win-win situation. The people spoke on condition of anonymity to discuss Biden’s anticipated announcement ahead of time.

The exact details of Biden’s plan, which would include an income cap limiting the pardon to those making less than $125,000 a year, were kept unusually tight within the Biden administration and had not yet been finalized ahead of the announcement.

Group decision-making has been a hallmark of the Biden White House, but the particular delay in issuing student loans reflects the thorny challenge he faced in delivering on a key campaign promise.

The plan would likely eliminate student debt entirely for millions of Americans and wipe out at least half of it for millions more.

The nation’s federal student debt now tops $1.6 trillion after rising for years. According to the latest federal data, more than 43 million Americans have federal student debt, with nearly a third owing less than $10,000 and more than half owing less than $20,000.

The continuation of the pandemic-era payment freeze comes just days before millions of Americans were to find out when their next student loan bills will arrive. This is the closest the administration has come to ending an extension of the payment freeze, with the current pause set to expire on August 31.

Wednesday’s announcement was made for the White House after Biden returned from a vacation in Rehoboth Beach, Delaware. The administration briefly considered higher education institutions in the president’s home state for greater disclosure, but scaled back its plans.

Biden was initially skeptical of canceling student loan debt when he faced more progressive Democratic senators Elizabeth Warren and Bernie Sanders, who proposed canceling $50,000 or more during the 2020 primaries.

Trying to win support among young voters and prepare for a general election battle against then-President Donald Trump, Biden introduced his original $10,000-per-borrower debt cancellation proposal without mentioning the income limit.

In recent months, Biden scaled back his campaign promise to impose an income cap as soaring inflation took a political toll and as he sought to fend off political attacks that the repeal would benefit higher earners. But Democrats, from members of Congress to those facing tough re-election bids this November, have pushed the administration for the broadest possible debt relief, seeing it in part as a stimulus issue, especially for black and younger voters this fall.

Frantic last-minute lobbying continued Tuesday, even as Biden remained on summer vacation. Senate Majority Leader Chuck Schumer, a Democrat who has been one of the most vocal advocates for canceling student loan debt in recent years, spoke privately by phone with Biden, asking the president to forgive as much debt as the administration could with knowledge of the challenge, according to the Democrat.

In his speech, Schumer argued to Biden that it was the right thing to do from a moral and economic standpoint, said the Democrat, who asked to remain anonymous to describe the private conversation.

Inside the administration, since at least the beginning of the summer, officials have discussed forgiving more than $10,000 in student debt for certain categories of borrowers, such as Pell Grant recipients, according to three people with knowledge of the discussions. That remained one of the last variables Biden considered before Wednesday’s announcement.

Democrats are betting that Biden, whose approval ratings have plummeted over the past year, can help motivate young voters to go to the polls in November with the ad.

While Biden’s plan is narrower than the one he initially proposed on the campaign trail, “he’ll get a lot of credit for doing what he’s committed to,” said Celinda Lake, a Democratic pollster who has worked with Biden during the 2020 election. .

She described student debt as a “gateway issue” for young voters, meaning it affects their views and decisions about housing affordability and career choices. A March poll of 18- to 29-year-olds by the Harvard Institute of Politics found that 59% of respondents favored some form of debt relief — whether for all borrowers or those with the greatest need — though student loans not included in the ranking leads among the issues that most concern people of this age group.

Some defenders were already preparing for disappointment.

“If the rumors are true, we have a problem,” Derrick Johnson, president of the NAACP, which has aggressively lobbied Biden to take bolder action, said Tuesday. He emphasized that black students face a greater initial workload than white students.

“President Biden’s decision on student debt cannot be the last example of policies that have left black people — especially black women — behind,” he said. “This is not how you treat black voters who came out in record numbers and cast 90% of their votes to save democracy again in 2020.”

John Della Volpe, who served as a consultant to the Biden campaign and is director of polling at the Harvard Kennedy School’s Institute of Politics, said the details of Biden’s announcement were less important than the decision itself.

“We are talking about trust in politics, in the government, in our system. It’s also about trust in a person, which in this case is President Biden.”

Coupled with concerns about expanding abortion restrictions and Trump’s return to the political scene, Della Volpe said student debt forgiveness “adds an additional windfall to an already improving position among young people.”

Meanwhile, Republicans see only political upside as Biden pushes for massive student debt cancellation ahead of November’s midterm elections, anticipating a backlash for Democrats — especially in states with large numbers of working-class voters without a college degree. Critics of the sweeping student debt forgiveness also say it would open the White House to lawsuits on the grounds that Congress never gave the president clear authority to cancel the debt on his own.

The Republican National Committee on Tuesday called Biden’s expected announcement a “handout to the rich,” arguing it would unfairly burden low-income taxpayers and those who have already paid off their student loans by covering higher education costs for the wealthy.

“My neighbor, a detective, worked three jobs (including selling carpet) while his wife worked to make sure their daughter got a quality college degree with no student debt,” Rep. Kevin Brady, R-Texas, the top Republican in the House representatives of the Ways and Means Committee, tweeted on Tuesday. “A great sacrifice. Now their taxes have to pay someone else’s student debt?”

Biden’s lengthy deliberations left the federal credit bureaus, which have been tasked with withholding credit reports while he weighs a decision, grumbling.

Industry groups complained that the delayed decision left them just days to notify borrowers, retrain customer service staff and update websites and digital payment systems, said Scott Buchanan, executive director of the Student Loan Service Alliance.

That increases the risk that some borrowers will be inadvertently told they need to make payments, he said.

“I think we’re taking a risk at this late stage,” he said. “You can’t just turn on a dime with 35 million borrowers who have different loan types and statuses.”

Associated Press writer Colin Binkley contributed from Washington.

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