White House officials have been weighing -- and leaning toward -- the cancellation of up to $10,000 in student loan debt per borrower tied to an income threshold, CNN reported. According to multiple sources familiar with the discussions, the plan is designed to offer the forgiveness to individuals who earn less than $125,000 per year. In addition to that baseline of student loan debt forgiveness for individuals who fall under a certain income level, administration officials have also recently discussed the possibility of additional forgiveness for specific subsets of the population, according to sources familiar with internal discussions in the administration. The announcement could come as early as Wednesday, but it is not clear that a final decision on the details of the announcement -- as well as the timing -- has been made, and there could always be eleventh hour changes. The White House is also expected to address in the coming days whether to extend again the current pause on federal student loan payments, which is set to expire on August 31. Read more.
In related news, former Treasury Secretary Larry Summers yesterday cautioned the Biden administration against extending the moratorium on federal student loan repayments and knocked “unreasonably generous student loan relief” he said could worsen inflation, The Hill reported. “I hope the administration does not contribute to inflation macro-economically by offering unreasonably generous student loan relief or micro-economically by encouraging college tuition increases,” Summers, who served during the Clinton administration, said in a series of tweets on Monday morning. The Biden administration is expected to make a decision soon on whether to expend the freeze on repayment and interest accrual for student borrowers set to lapse at the end of the month. The pause was implemented under the Trump administration at the onset of the coronavirus pandemic and has since been extended six times. Advocates and Democrats have pressed for continued relief for borrowers, citing ongoing financial hardship due to the coronavirus pandemic and rising inflation that has forced many Americans to spend more on basic necessities. However, the continued moratorium has been met with considerable pushback from Republicans who say the relief is too costly and is unfair to Americans who didn’t attend college. Read more.
