Biden is on the verge of keeping his campaign promise and canceling his student loan debt

Last month, President Joe Biden announced that the student debt moratorium would be extended until August 31, marking the seventh postponement since his predecessor originally declared the freeze in March 2020.

As the issue has resurfaced, senior Democrats have urged Biden to write off student loan debt, and recent reports indicate the president may soon deliver on his campaign promise to write off student loan debt; however, the exact amount he will cancel is still unknown. Despite promising to forgive a minimum of $10,000 per borrower in 2020, some are calling for $50,000, while others are urging cancellation of the entire $1.75 trillion student debt in the USA.

“I’m not looking at a $50,000 debt reduction,” President Biden said during last week’s briefing when asked about student loan forgiveness. “But I am carefully considering whether or not there will be further debt forgiveness, and I will have an answer on that within the next two weeks.”

Although Biden never promised to forgive each borrower $50,000, that specific amount became part of the discussion thanks to a February 2021 press release from Senator Elizabeth Warren (D-Mass), the Chief of the Senate majority Chuck Schumer (DN.Y.) and Congresswoman Ayanna Pressly (D-Mass).

The press release outlined a plan for Biden to “address the student loan debt crisis by using existing authority under the Higher Education Act to forgive up to $50,000 in student loan debt.” student loan for federal student loan borrowers”.

After detailing the impact of the pandemic on the economy and society, the press release states, “By canceling up to $50,000 in federal student loan debt for borrowers, President Biden can take the only step most effective executive available to massively stimulate our economy, help close the racial wealth gap, and ease this impossible burden on tens of millions of families.

The Biden administration has already canceled $7 billion in student loans for qualified borrowers, specifically borrowers who were receiving Social Security disability benefits and eligible for the Total and Permanent Disability Release (TPD) program.

However, according to educationdata.org, the collective amount of student debt in the United States is $1.75 trillion as of April 10, 2022, of which Biden’s $7 billion only covers about 0.4%. Additionally, the $7 billion affected only 350,000 of the 43 million Americans with student loan debt, relieving about 0.8% of total borrowers.

In addition to extending the moratorium and canceling debt for qualified borrowers, Biden also changed student loan forgiveness programs last year. For example, it relaxed the unreasonably strict and often confusing requirements of the Public Service Loan Forgiveness Program (PSLF), making it easier for borrowers to qualify.

Plus, the most recent extension of the student loan freeze comes with a new benefit: a “fresh start” for borrowers who were in default before the pandemic when payments resume. According to the US Department of Education, this will eliminate “the impact of delinquencies and defaults” and allow borrowers “to return to repayment in good standing.”

Senior industry analyst at Bankrate Ted Rossman told Fortune last month that removing the status could boost a borrower’s credit score by as much as 100 points, saying, “It could be really big, especially for someone whose only default is a missing student loan payment. ”

An excerpt from last week’s briefing | Bloomberg Markets and Finance YouTube Channel

Biden looks set to deliver on his promises from 2020

Like a classic phone game, there is confusion among social media users as to what Biden actually promised on student debt during his campaign, with some saying he intended to wipe out 1.75 of them. trillion dollars.

The most explicit promise Biden made was to forgive “a minimum of $10,000/person in federal student loans,” according to his Tweeter as of March 2020. However, he has also publicly stated, “I will eliminate your student debt if you come from a family [making less] over $125,000 and went to a public university. Biden gave this particular quote during a town hall in Miami, Florida in October 2020.

Although he has never pledged to write off every penny for everyone with student loan debt, Biden has yet to deliver on any of his aforementioned promises. But with the question resurfacing thanks to this recent extension and pressure from the media and senior Democrats, Biden looks set to finally deliver on what he promised.

According to a recent Washington Post report, “President Biden has given his strongest indication yet in a private meeting with House Democrats that he is on the verge of taking significant steps to provide student loan relief. “.

These indications were given during a meeting with members of the Congressional Hispanic Caucus last Monday. Representative Tony Cárdenas (D-California), who was in attendance, told the Post that he not only urged the president to extend the moratorium beyond August 2022, but also to sign an executive order to rescind at least 10 $000 of student loan debt per borrower. .

Cárdenas shared with the Post how he explained to Biden that “Latinos in the United States who have student debt still have more than 80% of their bill owing after more than a dozen years.” Several members of Congress present told the Post that Biden responded positively to those urgings.

Student debt debate continues

As student loan debt has become a major issue in recent years, the debates surrounding it have intensified. For young people, the topic is especially relevant. A Harvard youth poll last month found that 38% of 18-29 year olds in the United States support full debt cancellation. The poll further revealed that “27% favor government aid with repayment options without any debt cancellation, and 21% favor debt cancellation for those who need it most. “, and that only 13% think that the government should not make any changes to its current budget. Politics.

In the political realm, it seems that most supporters of debt relief are Democrats. For example, in their joint press release, Warren, Pressly and Schumer said, “Studies show that canceling student debt would significantly increase the wealth of Black and Latino households and help close the racial wealth gap, would bring immediate relief to millions of Americans during the pandemic. and recession, and provide our economy with massive consumer-driven stimulus.

Early last month, Senator Bernie Sanders (D-VT) simply said in a Tweeter, “Cancel student debt. Everything.” Sanders then backed up his proposal with a “CANCEL STUDENT DEBT” live stream on YouTube, where he explained the widespread impacts of student debt on Americans for nearly an hour.

On the other side of the argument, Republican officials aren’t too keen on the idea. In February of last year, Sen. John Thune (R-SD) told the Senate that forgiving student loans, even up to $50,000, would be “incredibly, fundamentally unfair.”

“Right now there are people in this country who have just paid off the last of their student loans,” Thune said. “They worked hard and made payments – sometimes for a few years, sometimes for a few decades. What happens to these people if the president steps in and forgives $50,000 in student debt? I will tell you. Nothing.”

“These people, who have worked hard for years to pay off their debt, will see no benefit from the broad-based loan forgiveness from Democrats,” Thune continued. “Meanwhile, other Americans who haven’t made more than a month or two of payments will see their student loan debt disappear. It’s incredibly unfair.”

For Sen. Ted Cruz (R-TX), the idea of ​​student loan forgiveness negates the responsibilities of people who choose to pursue higher education. Last year, Senator tweeted“students also have INDIVIDUAL RESPONSIBILITY for choices.”