Student loans: This could be a memorable week for millions of young people

Millions of borrowers are anxiously waiting to hear whether President Joe Biden will extend the pause on federal student loan repayments, which is set to expire Aug. 31, or possibly forgive any of their debts. As a reminder, borrower balances have been effectively frozen since the start of the Covid-19 pandemic, with no payments required on most federal student loans since March 2020.
“We talk about it daily, and I can tell you that the American people will be hearing by about next week from the president and the Department of Education about what we’re going to do around this,” Cardona told NBC. Chuck Todd on “Meet the Press”.

He didn’t elaborate, saying he wouldn’t advance the announcement. “I have no news to report today,” Cardona said.

Here’s what you need to know.

What does Biden weigh?

CNN has learned that White House officials are weighing — and leaning toward — canceling up to $10,000 in student loan debt per borrower tied to an income threshold. The plan, according to multiple sources familiar with the discussions, is designed to offer forgiveness to people earning less than $125,000 a year.

In addition to this base student loan debt forgiveness for those below a certain income level, administration officials have also recently discussed the possibility of additional forgiveness for under-incomes. specific sets of the population, according to sources close to the internal discussions in the administration.

Some Democratic lawmakers and advocates have called for Biden to globally forgive up to $50,000 in student loan debt per borrower, though the president has said he won’t consider that number.

How serious is the US student debt problem?

Borrowers hold $1.6 trillion in unpaid federal student loan debt, more than Americans owe in credit card or car loan debt.

  • According to the College Board, about 54% of borrowers with outstanding student loan debt owed less than $20,000 in March 2021.
  • About 45% of outstanding debt was held by the 10% of borrowers who owed $80,000 or more.

What is the downside of a broad pardon?

While forgiveness of large student loan debt could bring financial relief to millions of Americans, the implications of such a significant policy shift are complicated, writes CNN’s Katie Lobosco.

And the action alone would do nothing to lower the cost of a college education for future borrowers or help those who have already paid for their degrees.

How does the Supreme Court intervene?

A recent High Court ruling limiting the Environmental Protection Agency’s ability to tackle the climate crisis could complicate Biden’s power to write off federal student loan debt.

Indeed, the court’s ruling — along with those in other recent cases on eviction moratoriums and Covid-19 vaccination mandates — signaled that judges may be inclined to curb the power of federal agencies to provide relief. significant policy changes if this power is not explicitly established. by Congress.

How has Biden dealt with student debt so far?

As Lobosco reported, the president has largely taken a targeted approach to student debt relief.

For example, earlier this month the Department of Education announced it would forgive $3.9 billion in student loan debt for 208,000 students attending the for-profit technical institute ITT today. disappeared today. That brings the total amount of loan cancellations approved under Biden to nearly $32 billion.

Biden also temporarily expanded the Civil Service Loan Forgiveness Program, which forgives government and nonprofit worker debt after 10 years of payments, and made changes to income-based repayment plans, bringing closer millions of forgiveness borrowers.

What do Americans think of student loan forgiveness?

Predictably, attitudes toward student debt relief are sharply divided along partisan and generational lines.

A majority of Democrats in a CNN poll in May (56%) — and an even larger majority of self-described liberals (69%) — said the government was doing too little on student loan debt, while only a third of Republicans and self-proclaimed conservatives have said the same thing.

Seventy percent of adults under 35 said the government was doing too little, a figure that fell to 50% among those aged 35-49 and 35% among those aged 50 or over.

This story was updated with additional information on Monday.

CNN’s Katie Lobosco, MJ Lee and Phil Mattingly contributed to this report.

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