President Biden is expected to announce student loan forgiveness for millions of Americans Wednesday, canceling up to $10,000 in debt per borrower while extending the moratorium on payments again.
Three people familiar with the plan confirmed it with the Associated Press on Tuesday.
While the plan is expected to limit debt forgiveness to those earning less than $125,000 a year, other specific details have yet to be released.
Initially, the administration considered announcing the news in his home state of Delaware, however, Biden is expected to make the announcement at the White House when he returns from his vacation at Rehoboth Beach on Wednesday.
The potential forgiveness and likely extension of the student loan payment freeze comes only days before the moratorium is set to expire on Aug. 31.
The payment freeze has been in place since March 2020, when then-President Trump sought to provide relief for borrowers amid the start of the COVID-19 pandemic. Biden has since extended the moratorium several times – despite warnings from Republicans and nonprofits.
On Tuesday, the Penn Wharton Budget Model estimated that moving forward with the cancellation plan would cost the federal government $329.7 billion over the next 10 years – with up to 73% of the cancellations assisting households in the top 60% of earners in the US.
If the administration decides to do away with the income threshold, it would bring the total cost to $344 billion.
Progressive Democrats have urged Biden to go even further with loan forgiveness by canceling up to $50,000 per borrower. If the president decides to pursue that, it would cost the government up to $980 billion, Penn Wharton estimated.
The outcome is unlikely as Biden has already shot down forgiving that much for each individual.
Even in March, the Committee for a Responsible Federal Budget warned that forgiving $10,000 in student loan debt for each individual could cost the government over $200 billion.
While the student loan cancellation is music to many Democrats’ ears ahead of the 2022 midterm elections, Republican lawmakers have been in an uproar on what it will cost everyday Americans.
“Hardworking Americans are not responsible for paying off the student loan debt of others,” Rep. Drew Ferguson (R-Ga.) tweeted. “Biden’s fundamentally unfair proposal comes at the expense of taxpayers – many of whom have fully paid off their student loans.”
“Student debt cannot be ‘canceled.’ Whether it’s the federal government or a private lender, you don’t just erase loans off the books,” Rep. Ralph Norman (R-SC) posted. “All Biden is doing is saddling OTHER PEOPLE with that debt.”
“Student loan cancellation is an election-year handout to the affluent elites that support Democrats — and it’ll use YOUR money,” Rep. Dan Bishop (R-NC) said.
“The idea our federal government can simply ‘cancel debt’ with the stroke of a pen is a lie and nothing more than political fodder to gin up votes,” said Rep. Bryon Donalds (R-Fla.). “Middle and lower-income Americans will bare the brunt of this ‘debt cancellation,’ paying the loans of wealthy individuals.”
“My wife & I graduated from FSU w/ lots of student loan debt & no idea how to pay for it,” Donalds added in a second tweet. “As we started our family & careers, it wasn’t easy, but we paid off the debt we were obligated to pay. Now, Biden wants to just pay off debt? What about those of us who did it the RIGHT WAY?”
Several lawmakers accused the administration of slapping millions of Americans in the face that have already paid off their student loans or chose not to attend college.
“Mass cancellation of student debt feels good to some, but it’s a slap in the face to people who sacrificed to pay loans, worked through college, went to a less expensive school or skipped college altogether,” Rep. Lee Zeldin (R-NY) posted. “Magically canceling loans is bad, far left policy & just flat out wrong.”
Rep. Andy Biggs (R-Ariz.) echoed, “Biden’s $10,000 student loan forgiveness plan is an affront to American taxpayers and conveniently checks off a campaign promise. If Biden truly cared about our country, he wouldn’t want to exacerbate inflation and hurt our middle class. This is about him, not the country.”
And Rep. Ashley Hinson (R-Iowa) tweeted, “Student loan debt cannot be canceled, it can only be transferred. Electricians, farmers, & truck drivers shouldn’t be on the hook for someone else’s degree.
“This is a total slap in the face to those who didn’t go to college & those who worked hard to pay off their loans.”
Based on the Penn Wharton Budget analysis, the National Taxpayers Union Foundation has estimated that if Biden moves forward with canceling $10,000 per borrower, it could cost the average taxpayer around $2,085.
Rep. Nancy Mace (R-SC) blasted the plan Tuesday saying, “Most Americans do things the right way. You pay your debts. Instead, our Administration wants to redistribute billions in student loan debt to our taxpayers.”
“It’s called personal responsibility: if you take out a loan, you pay back the loan,” Rep. Ben Cline (R-Va.) said. “Biden’s student loan debt cancellation is a handout to the coastal elites and will fall on the backs of hardworking American taxpayers who didn’t have a chance to attend college.”