President Joe Biden’s administration plans to “cancel” up to $10,000 in student loan debt per borrower.
Biden had wanted to reveal his debt cancellation plan to the public this past weekend but postponed the announcement due to the Uvalde school shooting massacre, according to The Washington Post.
Three people with “knowledge of the matter” told the Post that the president’s plan calls for limiting debt forgiveness to individual borrowers who earned less than $150,000 in the previous year.
However, the plan’s details could change before the White House’s official announcement.
Biden may impose other conditions on debt cancellation. For instance, Vox speculated he could restrict forgiveness to loans used to pay for undergraduate degrees. The administration may also wish to narrow forgiveness further and exclude loans that are in default.
If the White House sticks with the $10,000 figure, the move will eliminate the outstanding balances of approximately a third of all student loan borrowers, costing taxpayers roughly $321 billion.
Biden’s plan has already drawn criticism from both debt-forgiveness advocates and opponents.
Thomas Gokey, a co-founder of Debt Collective, a national association for debtors, told CNBC that $10,000 is “an absolute insult.” He claimed the figure was “less than what [Biden] promised on the campaign” and that the proposed method of means-testing could discourage eligible debtors.
While Biden did promise $10,000 of “student debt relief” on the campaign trail, he made no mention of imposing income caps. Such caps may also prove logistically challenging to implement.
If qualifying borrowers are means-tested by their previous year’s income, many low-income earners who do not file tax returns could face difficulty securing debt forgiveness.
“Everyone will have to jump through hoops,” said Gokey.
U.S. Senator Tom Cotton of Arkansas opposed the plan in principle, arguing on Twitter, “Why should a waitress who didn’t attend college pay the student loan debt of a lawyer making $300,000?”
Why should a waitress who didn't attend college pay the student loan debt of a lawyer making $300,000?
This is exactly what will happen under Biden's student loan transfer plan.
— Tom Cotton (@TomCottonAR) May 27, 2022
He wrote in another tweet, “There’s no such thing as student loan ‘forgiveness.’ There’s only transferring the debt from those who took the loans (and benefitted) to those who didn’t attend college or responsibly paid off their debts.”
There's no such thing as student loan "forgiveness."
There's only transferring the debt from those who took the loans (and benefitted) to those who didn't attend college or responsibly paid off their debts.
— Tom Cotton (@TomCottonAR) May 27, 2022
The White House claims no decision has been reached on any plan to forgive student debt.
