Joe Biden Set To Reveal Plan To Cancel $10,000 Student Loan Debt of Americans Earning Less Than $125,000

Joe Biden Is Set To Reveal Plan To Cancel $10,000 Student Loan Debt of Americans Earning Less Than $125,000 — Joe Biden might propose a potential $10,000 federal student loan debt forgiveness program as soon as this Wednesday for each borrower making less than $125,000 per year. Win McNamee/Getty Images

According to those familiar with the situation, President Biden will reveal his plans for student loan debt relief on Wednesday, a widely anticipated event that potentially affect around 45 million borrowers nationally.

Although the proposal's details were still being worked out, White House sources said President Joe Biden was considering a targeted scheme that would offer $10,000 in debt relief to debtors earning less than a specified level of income.

Joe Biden Expected To Cancel Borrower's $10,000 Student Loan

President Joe Biden is also anticipated to extend a moratorium on loan payments for all borrowers, a Trump-era provision that has been in force since the outbreak began. The federal government, which is the primary lender for Americans who borrow to pay for their higher education, has $1.6 trillion in student debt.

Throughout his administration, President Joe Biden has faced requests from borrowers and the Democratic Party's radical left to cancel a portion of it. However, White House insiders say the president has anguished over the choice, asking whether it should extend to students at both public and private colleges, and stating that he does not want the relief to apply to people with high salaries.

The decision will deepen disputes in Washington and inside the Democratic Party over economic fairness and the potential to worsen a 40-year-high inflation rate. President Joe Biden had vowed to choose by the end of the month, but he is due to return to the White House on Wednesday from Delaware, where he is on vacation with his family.

Debts have been forgiven for qualifying public employees, permanently handicapped debtors, deceived students, and students whose institutions unexpectedly shuttered while they were enrolled, according to New York Times.

According to a new Penn Wharton Budget Model report released on Tuesday, erasing student loan debt for this income category may cost between $300 and $980 billion over ten years. It also mentions that the majority of the relief would go to debtors in the top 60% of income earners.

Larry Summers, Obama's top economic adviser, warned the Biden administration against unreasonably generous student loan relief, predicting that it would raise inflation further. He also said that the worst idea would be to extend the current moratorium on student loan payments, which is set to expire next week.

While the specific terms of an upcoming statement on the future of student debt forgiveness are still being hammered out, President Biden's White House has been hinting for months that a certain amount for each borrower may be canceled. Sources suggest that the administration is considering extra forgiveness for particular demographic groupings in addition to the basic forgiveness of $10,000 per borrower achieving specific income criteria.

Sen. Chuck Schumer Pleads Biden To Eliminate Student Loan Debt

Education Secretary Miguel Cardona also stated on Sunday that an announcement on the future of the student loan moratorium will be made within the following week. The administration is planning to prolong the moratorium for a sixth time, after student loans were originally suspended at the start of the COVID-19 pandemic in March 2020.

Those with outstanding federal student loans have not had to make monthly payments in nearly two and a half years, and their interest accruement has also been suspended during the public health emergency, which has also resulted in widespread layoffs and furloughs, as per Daily Mail.

Before an expected announcement to absolve up to $10,000 in student loan debt, Democratic Senate Majority Leader Chuck Schumer of New York allegedly appealed to President Joe Biden to abolish as many student loan debt as possible.

Schumer contacted the president on Tuesday, while he was on vacation in his home state of Delaware, and encouraged him to erase the maximum amount of debt feasible. It was unclear whether Schumer's alleged last-minute plea had any influence on the final contents of the debt forgiveness scheme, which are still being kept under wraps, Newsweek via MSN reported.