WASHINGTON — The White House is considering forgiving at least $10,000 in student loans per borrower through executive action, according to people familiar with the matter, with momentum increasing as President Joe Biden seeks ways to bolster voter enthusiasm ahead of the November midterms.
The move would come with considerable risks. Some deficit hawks worry it could worsen the inflation that is already weighing heavily on Democrats’ chances of maintaining control of the House and Senate. But any move may not go far enough to appease progressives and other advocates.
The administration has not yet settled on the proposal’s contours, but aims for the relief to be targeted to lower- and middle-income individuals, according to people familiar with the internal discussions. Biden himself confirmed Thursday that he plans to do something, but said he is not weighing $50,000 in forgiveness per borrower.
That figure has been pushed by House progressives and Democratic Senator Elizabeth Warren, along with several advocacy and civil rights groups. Former top Warren aides, including Julie Margetta Morgan and Bharat Ramamurti, now hold top jobs inside the Biden administration, working on the issue at the Department of Education and National Economic Council.
The president proposed canceling $10,000 per borrower during the presidential campaign, but his White House has been slow to follow through on his promise. It has extended a temporary freeze on student debt payments that was enacted in the earliest days of the pandemic, a move that has allowed it to kick the can down the road on the issue.
When debt payments were frozen in 2020, it was part of a wider effort to prop up demand in the pandemic slump. That rationale doesn’t apply now, with the Federal Reserve battling soaring inflation and trying to rein in spending, not boost it.
Aides say the president had hoped Congress would take legislative action and his team has been divided on the merits of broad student debt forgiveness.
The White House is looking for ways to excite progressives and other crucial voter groups before the midterms, where lackluster polling for Democrats shows the party faces an uphill battle against a supercharged Republican base.
Canceling student debt polls tremendously well with voters under the age of 45, particularly young men who may have borrowed money for community or technical college, said Celinda Lake, president of Lake Research Partners, a firm that works with Democratic candidates and interest groups and advised the Biden presidential campaign. A Morning Consult/Politico poll from early April showed that 47% of those surveyed called student debt relief a top or very important issue.
Forgiveness of $10,000 per borrower — the floor of what Biden is considering — would clear loans for 15 million of 46 million borrowers.
Such a move could have particular impact for Black Americans, who are disproportionately affected by student loan debt. Statistics from the Education Data Initiative shows the average Black college graduate owes $25,000 more than white peers.
Nearly half of Black students owe an average of 12.5% more than they borrowed just four years out of college. During that same period, 83% of white graduates owe 12% less than they borrowed. Over half of Black student borrowers report that their net worth is less than their student debt balance.
“President Biden, we agree that we shouldn’t cancel $50,000 in student loan debt. We should cancel all of it. $50,000 was just the bottom line. For the Black community, who’ve accumulated debt over generations of oppression, anything less is unacceptable,” NAACP’s Wisdom Cole said in a statement.
When asked if she’d be supportive of Biden canceling just $10,000 per borrower in debt, Warren told reporters Thursday she would “not negotiate against” herself.
“We picked the number $50,000 because it does the most to help close the racial wealth gap, the gender wealth gap and promote equality of opportunity throughout the country,” Warren said Thursday.
Progressives spent Thursday praising Biden for engaging in a conversation.
Representative Mondaire Jones, a New York progressive Democrat, said while he thinks that Biden should cancel more, “even $10,000 would be transformational for millions of Americans.”
Moderate Democratic Senator Joe Manchin told reporters Wednesday that something needs to be done to provide relief on student loan debt, but he has concerns about “just writing it off completely.”
Republicans are arguing student debt forgiveness costs the government too much money and would add to inflation. GOP Senators John Thune, Richard Barr, Mike Braun, Bill Cassidy and Roger Marshall introduced a bill that would ban the president from canceling outstanding federal student loan debt due to a national emergency.
“After a huge increase in our national debt, thanks to the pandemic and reckless Democratic spending, the government does not need to be forgoing billions of dollars by providing student loan relief to Americans,” Thune said Wednesday.
A White House spokesperson said the administration’s actions, so far, on student debt have resulted in the approval of more than $17 billion in discharges to over 700,000 borrowers, plus tens of billions more saved by the 41 million borrowers who have benefited from the extended student loan payment pause.
