President Joe Biden and his spokeswoman on Thursday offered an update on the Biden administration’s next steps with student loans, a day after Senate Majority Leader Chuck Schumer, the New York Democrat, suggested the president was getting closer to cancelling up to $50,000 in student debt per borrower.
“I am not considering $50,000 debt reduction, but I’m in the process of taking a hard look at whether or not there will be additional debt forgiveness, and I’ll have an answer on that in the next couple of weeks,” Biden told reporters at the White House, as he responded to questions following a speech on additional aid for Ukraine.
Forgiving up to $50,000 in student debt per borrower would cost $904 billion and would forgive the full balance for 79% of the 37.9 million federal borrowers, according to recent estimates from the New York Federal Reserve.
Adding a household income limit of $75,000 would cut the total cost of a $50,000 forgiveness policy to $507 billion, and having that same income limit but forgiving a max of $10,000 per borrower would cost $182 billion, the New York Fed reckons.
Biden is considering income limits for loan forgiveness, White House press secretary Jen Psaki told reporters after the president’s remarks.
“He has talked in the past about how he doesn’t believe that millionaires and billionaires, obviously, should benefit, or even people from the highest incomes. So that’s certainly something he would be looking at,” she said during a briefing, referring to means-testing.
Psaki declined to give an upper limit for the loan amount that might be forgiven.
If the White House presents a plan on loan forgiveness within a couple of weeks, that would be faster than previously expected. Psaki in mid-April had said the Biden administration will extend its pause for student-loan repayments again before Aug. 31 — or finalize a plan by then on canceling student debt.
When asked Thursday about having a plan within a few weeks rather than by the end of the summer, Psaki said her prior comment was more about making a decision before Aug. 31, when the pause for repayments ends. She added: “We always like to beat timelines here.”
Republicans and some analysts have cast Biden’s moves with student loans as a midterm-elections gambit.
“Desperate polls call for desperate measures,” said Republican Sen. Mitt Romney of Utah in a tweet on Wednesday. “Other bribe suggestions: Forgive auto loans? Forgive credit card debt? Forgive mortgages? And put a wealth tax on the super-rich to pay for it all. What could possibly go wrong?”
When asked about Romney’s criticism, Psaki said Biden’s view is that “as the leader of the country what he needs to do is continue to provide relief to people who need it most, to help people get some extra breathing room, and that includes consideration of getting people relief” after they “have taken steps to further their education and maybe taken steps to advance their family circumstances.”
The White House press secretary also pushed back when a reporter asked whether erasing student loans would help add to high inflation. The Committee for a Responsible Federal Budget has warned that even partial forgiveness would be “costly, regressive and inflationary.”
“When we talk about inflation, sometimes we talked about it like a 50,000-foot, ivory-tower economist might,” she said. “Really how inflation impacts people is costs, and what they’re paying out of their pocket. So actually considering this would be helping Americans address exactly that issue.”
Schumer has advocated, along with other Democratic lawmakers such as Sen. Elizabeth Warren of Massachusetts, for Biden to use executive action to wipe out up to $50,000 in student debt per borrower. The president, meanwhile, has long supported loan cancellation of up to $10,000 per student.
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