Biden cancels $3.9 billion in student loan debt, but Aug. 31 moratorium deadline looms
Biden brought his total amount of loan discharges to $32 billion, but still faces a deadline to extend the pause or forgive more.
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Millions of borrowers have a debt cloud looming over, as President Joe Biden must make a decision on or before Aug. 31, when the repayment pause comes to an end for student loans. The president can decide to forgive more debt, or extend the payment pause for longer.
Student loans have been essentially frozen since the start of the pandemic in March of 2020, and since then interest has not accumulated and collections on defaulted debts have also been on hold.
After more than two years, borrowers face an uncertain future as millions across the country are already having a tough time making ends meet. Trying to repay back any student loans would only worsen the situation for millions of former students. While the president has been on holiday, a smaller decision on the matter did come on behalf of the Biden administration on Aug. 16.
Biden canceled another $3.9 billion in student loan debt for former for-profit college students.
The announcement came from the Department of Education that it would cancel the debt for more than 208,000 students. These students attended the now-defunct ITT Technical Institute. Under Biden, more than $32 billion has been forgiven. That is more than any under previous administrations.
During his time in office, Biden has extended the student loan repayment pause four times. The last extension came back in April of this year. Democratic leaders have called on the president to cancel up to $50,000 in student loan debt per borrower, but Biden has declined to do so at that number. With less than three weeks to go until the Aug. 31 deadline, reports from the White House say that the president is looking at potentially canceling about $10,000 of debt with exception to those who make more than $125,000 a year.
White House Press Secretary Karine Jean-Pierre told reporters on Tuesday, Aug. 9, that "we haven't made a decision yet.”
“The Department of Education will communicate directly with borrowers about the end of the payment pause when a decision is made — When it comes to the cancellation... the President understands firsthand the burden that a student loan has on families... and so we're just going to continue to assess our options for cancellation," she continued.
While the President continues to make up his mind on what to do before that deadline, not only are students hanging on, but so are the student loan servicers who usually send out bill statements 21 days before a payment is due. Because the president is still deciding, nothing has been done yet.
If Biden were to go with his $10,000 debt cancellation plan as the White House suggests, that would mean a forgiveness of over $321 billion of student loans, as more than 40 million Americans carry student loan debt. It would also cancel the entire balance for more than 11.8 million borrowers, according to the Federal Reserve.
At the root of the issue is college affordability, which Biden has tried to address but has been denied in some actions. Any and all of his college affordability proposals have been denied by Congress. Aside from the Inflation Reduction Act, which does not have any measures concerning college affordability or student debt, very little legislation has been able to successfully pass.
It has been noted by many that if the pause is extended or the debt entirely is canceled, while it may bring the borrowers much a relief, it would shift that cost over to taxpayers, which includes millions who chose not to go to college or already paid for their education. This is hundreds of billions of dollars that could be shifted to them instead. It could also add to the already high inflation issue.
No matter the decision that is made by the deadline, Biden has expanded on many debt forgiveness programs that can help out more than 43 million borrowers. The expansion allows for millions more to qualify for the programs, especially those who were defrauded by for-profit colleges.
Attitudes toward student loan forgiveness have been divided overall, and the president has a ticking clock to make a decision that will impact all of the country in some aspect.