President Biden is taking his time to reveal whether he will release a seventh extension to the pandemic-era pause on student loan payments that expires at the end of this month, suggesting that a larger announcement involving the cancellation of student debt will come with it.
The administration has already signaled that loan repayments that were due to resume on September 1 will not be due. The Wall Street Journal reported last week that the Department of Education asked loan officers not to send billing statements.
With no time to send out statements providing the required 30-day notice, it’s a safe bet that borrowers won’t have to resume payments just yet. Some may never have a student loan repayment again.
According to several reports, the president plans to eliminate some student debt for current borrowers; it’s just a matter of dollar amount. There is also talk of the income cap that could be set, if any.
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Sources familiar with the Wall Street Journal tell the White House the White House is considering several options, including one confirmed by former press secretary Jen Psaki earlier this year, which involves canceling $10,000 in student debt – a promise made by Biden during his presidential campaign — for anyone earning less than $125,000 a year.
The question is: what will be the political ramifications?
With Biden’s polling numbers showing he is currently unpopular even with his base heading into November’s midterm elections, where congressional control is at stake, the president’s decision on the issue is key.
Progressives and civil rights groups are pushing for Biden to give $50,000 in student loan forgiveness, and nothing less. Activists seeking to clear their debts argue that borrowers have been tricked by universities and the federal government, leaving them with insufficient salaries to cover payments and preventing them from achieving life goals like home ownership. .
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The NAACP delivered a letter to the president on Friday, telling him that $50,000 must be the minimum level of forgiveness with no income bracket cap because black borrowers “have virtually no realistic way to repay it in the unjust economy. of today”.
Republicans have strongly pushed back on the proposal to cancel student debt, pointing to the cost, the proposed income caps, the fact that borrowers have chosen to bear the payments, and the ethics of requiring all taxpayers to foot the bill. – including those who have never taken out student loans and those who have already repaid theirs.
“Student loan forgiveness is regressive — it writes off the debts of wealthy kids who will be fine,” Sen. Ben Sasse, R-Neb., told FOX Business. “It’s a blow to all the kids who have paid for college or worked hard to pay off their loans.”
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It’s an argument that vulnerable Democrats will also have to respond to as the November election approaches.
An added risk is that the executive branch’s student loan forgiveness is also likely to face legal challenges, given that Congress has the sole power to authorize the spending of taxpayers’ money.
Having already lost several court battles, the cancellation of a student loan by a court could be seen as another broken promise to the far left and seen as a rebuke to the administration for excess of power.
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Whether or not he holds up in court, the award is likely to come under intense scrutiny for Biden, who has continued to push multi-trillion-dollar spending programs while Americans grapple with inflation. paralyzing which is at its highest level in 40 years.