After a months-long internal debate, the White House appears to have landed on a plan to forgive $10,000 in student debt per borrower. The forgiveness would tentatively apply to individuals earning less than $150,000 in the previous year or less than $300,000 for married couples filing jointly, according to reporting from The Washington Post.
Despite the cap, the relief would apply to roughly 97% of student debt holders, according to Matt Bruenig, founder of the left-leaning think tank People’s Policy Project. The $10,000 relief would also wipe out student debt entirely for about a third of federal student loan borrowers.
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Three people familiar with the plan spoke on background to the Post, but stressed the plan is not final and details of it could still change. White House spokesperson Vedant Petal said, “No decisions have been made yet.”
What's less clear is whether interest and payments will resume at the end of August when the current pause ends.
The White House deliberated for months over taking the action that many Democratic base voters deemed an important campaign promise by candidate Joe Biden. One of Biden's Democratic rivals, Sen. Elizabeth Warren of Massachusetts, made cancelling $50,000 in student debt a centerpiece of her campaign.
“We should forgive a minimum of $10,000/person of federal student loans, as proposed by Senator Warren and colleagues,” Biden tweeted on March 22, 2020. “Young people and other student debt holders bore the brunt of the last crisis. It shouldn't happen again.”
Biden repeated the pledge several times on the campaign trail.
Since the campaign, both Warren and Majority Leader Chuck Schumer have continued to press for more aggressive action of wiping out at least $50,000 of student debt for federal borrowers. Sen. Raphael Warnock of Georgia, who’s up for reelection in November, joined Warren and Schumer in a meeting last week with President Biden in which they urged him to take action.
“Significantly cancelling student debt can’t come soon enough, as Georgia student loan borrowers still have a mountain to climb as they continue navigating the changing economy,” Warnock said in a statement following the meeting. “This relief would lower people’s financial burdens, and spur entrepreneurship and homeownership. It would also provide the most help for Georgians who graduated from institutions like trade schools and community colleges, and the countless borrowers who weren’t able to finish their degree.”
For many advocates, cancelling debt is a matter of racial justice since Black borrowers are disproportionately impacted by carrying student debt.
“The Black community continues to be shackled by student debt, and $10,000 in cancellation will not break the chains," Wisdom Cole, national director of the NAACP’s youth and college division, said at a rally outside the White House earlier this month.
The nonpartisan think tank Committee for a Responsible Federal Budget estimates that cancelling $10,000 per borrower would cost roughly $230 billion. But as of March, the two-year pause in payments had already cost about $100 billion and would cost some $50 billion per year to maintain.
