Biden expected to cancel student loans for millions of U.S. borrowers Wednesday
2022.08.24 17:25
FILE PHOTO: U.S. President Joe Biden pauses as he speaks during a signing ceremony for “The Inflation Reduction Act of 2022” in the State Dining Room of the White House in Washington, U.S. August 16, 2022. REUTERS/Leah Millis/File Photo
WASHINGTON (Reuters) – U.S. President Joe Biden is expected to announce Wednesday that the government will forgive $10,000 in student loans for many of the country’s debt-saddled college-goers, sources inside and outside the administration say.
The move could win back waning support from younger voters who backed Democrat Biden in the 2020 presidential election, and free up hundreds of billions of dollars in new consumer spending, adding a new wrinkle to the country’s inflation fight.
U.S. consumers carry a massive $1.75 trillion in student loan debt, most of it held by the federal government, the result of private and state-backed university tuition fees that are substantially higher than in most other rich countries.
Debt-relief advocates expect the administration to extend its pause on student loan repayment through to the end of the year, while also announcing plans to forgive as much as $10,000 in student debt for borrowers whose income falls below $125,000 a year.
Cutting $10,000 in federal debt for every student would amount to $321 billion of federal student loans and eliminate the entire balance for 11.8 million borrowers, or 31% of them, a New York Federal Reserve study shows.
A pandemic-linked government pause in student loan interest and payments is due to expire at the end of August. Borrower balances have been frozen since the beginning of the COVID-19 outbreak, with no payments required on most federal student loans since March 2020.
