White House officials plan President Biden to make an announcement Wednesday about his proposal to address student loan debt, according to people familiar with the matter.
The President and his top aides have been considering for months whether to cancel any federal student loan debt. Mr. Biden’s top advisers have discussed several proposals, including eliminating $10,000 in federal student loan debt for borrowers making less than $125,000 a year, the people said. The president’s advisers also discussed extending the pandemic pause on federal student loan payments.
The White House has kept the details of the decision under wraps. Only a small group of top aides to Mr. Biden have been briefed on his plans, some of the people said.
Mr. Biden is scheduled to return to the White House on Wednesday from Delaware, where he is vacationing with his family. The president said he would announce a decision on student loans by Aug. 31.
The White House did not immediately respond to a request for comment.
A move to forgive $10,000 in student debt below certain income thresholds would fall short of progressive Democratic calls for full student debt cancellation or $50,000 per borrower to be written off, but could apply to a majority of the 40 million people who hold a combined $1, 6 trillion in student loan debt.
Republicans have opposed broad student debt forgiveness, saying such a move would be unfair to those who have already paid off their loans or never attended college and could worsen inflation.
A report released Tuesday by the Penn Wharton Budget Model estimated that a one-time maximum debt write-off of $10,000 per borrower with incomes of less than $125,000 a year would cost about $300 billion.
Last month, more than 100 Democratic senators and House members from across the party’s ideological spectrum asked Mr. Biden to extend the loan moratorium beyond its Aug. 31 expiration, citing ongoing financial difficulties. Mr. Biden has cited similar reasoning for extending the pause in the past, most recently in April.
“Continuing student loan payments would force millions of borrowers to choose between paying their federal student loans or housing, food on the table, or paying for child care and health care,” the House Democrats wrote.
Republicans have opposed continuing the moratorium, arguing it constitutes “de facto loan forgiveness.” House Republicans introduced a bill this month that would end the moratorium as well as overhaul other aspects of the federal student loan portfolio. The bill is not expected to go anywhere as long as Democrats control Congress and the White House.
The White House has left borrowers, loan servicers and the Education Department itself in limbo as Mr. Biden mulls whether to extend the moratorium. Last month, the administration told loan servicers to refrain from sending chargeback notices or other communications related to restarting payments.
Loan servicers are contracted by the federal government to manage student loan payments. They communicate with borrowers about how much they owe, where and how to send payments, and answer questions borrowers have about repayment plans. Typically, they send chargeback notices at least 30 days before payments start, so borrowers can plan ahead.
On Monday, a group of loan officers urged the administration to make a decision and said any move so close to the deadline increases the potential for “borrower miscommunication incidents,” according to a letter seen by the Wall Street Journal.
“You should be aware that any announcement at this late date, less than ten days before the scheduled Sept. 1 reopening, risks an operational shutdown,” wrote Scott Buchanan, head of the Student Loan Servicing Alliance, an industry group.
Write to Andrew Restuccia at firstname.lastname@example.org, Gabriel T. Rubin at email@example.com, and Tarini Parti at Tarini.Parti@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8