Borrowing

Biden mulls canceling most student loans: 'This seems like a lot more than $10,000,' expert says

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U.S. President Joe Biden gestures as he arrives to board Air Force One at Delaware Air National Guard Base, in New Castle, Delaware, U.S., April 25, 2022. 
Tasos Katopodis | Reuters
Key Points
  • President Joe Biden is set to “make a decision about any cancellation of student debt before the conclusion of that pause on student loans," White House press secretary Jen Psaki said Monday.
  • "What was promising was that this seems like a lot more than $10,000," says Natalia Abrams, the founder of the Student Debt Crisis Center.

President Joe Biden may be looking to make good on his campaign promise to forgive federal student loan debt.

During a White House meeting Monday with members of the Congressional Hispanic Caucus, the president indicated he was currently looking to provide some form of student debt cancellation, according to multiple reports.

On the campaign trail, Biden promised federal debt cancelation of $10,000, but the final proposal could be more comprehensive, says Natalia Abrams, the founder of the Student Debt Crisis Center.

"He said he's looking into cancelling most student loan debt. What was promising was that this seems like a lot more than $10,000. That's what was surprising to me, that he's now talking about a much broader base debt cancelation," she says.

What's positive is "it feels like the first time President Biden has echoed and said almost identical to what he said on the campaign trail," Abrams says.

During a White House press briefing Monday, Press Secretary Jen Psaki said Biden "would make a decision about any cancellation of student debt before the conclusion of that pause on student loans." Earlier this month, the Biden administration announced another extension to the payment pause for federal student loan borrowers, this time through August 31. Payments would resume in September.

Student loan borrowers feel a 'renewed sense of optimism'

So far, the federal student loan payment pause, which has been in effect since March 2020, has helped roughly 41 million borrowers save $5 billion in interest payments a month, according to the U.S. Education Department.

That means a lot of borrowers have been able to save a lot of money, as a recent viral tweet pointed out. "Not buying Starbucks once per week would save me $240 dollars per year. The pause in student loan interest has saved me 50k dollars of added interest for the past 2 years," wrote Dr. Josh Zozaya.

"The fact that the President and this administration broadly continues to say they're looking into debt cancellation, as opposed to taking action on debt cancellation, is creating a good deal of confusion," says Cody Hounanian, executive director at Student Debt Crisis Center. "But there is, I think, a renewed sense of optimism that we're all moving in the right direction when it comes to permanent relief."

While some lawyers still debate whether the president has the authority to forgive debt through executive action, Abrams and Hounanian say it's pretty clear cut. The White House has "been using the same legal authority statute to pause interest and not collect on payments, for the past two years plus," says Abrams. That indicates the president does have the authority he would need to cancel debt.

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