U.S. President Joe Biden is expected to announce a decision to forgive student loan debt as early as Wednesday, a source with knowledge of the matter told Reuters.
A pandemic-linked government pause in student loan interest and payments is due to expire at the end of August. Borrower balances have been frozen since the beginning of the COVID-19 outbreak, with no payments required on most federal student loans since March 2020.
Several debt-relief advocates expect the administration to extend its pause on student loan repayment through to the end of the year, while also announcing plans to forgive as much as $10,000 in student debt for borrowers whose income falls below $125,000 a year.
Student debt cancellation has become a priority for many liberals and any move to address it could help to shore up support among younger and more educated voters, who tend to lean Democratic, ahead of November’s midterm congressional elections.
Majority Leader Chuck Schumer, the top Senate Democrat, spoke with Biden on Tuesday evening and pushed him to cancel as much student loan debt as he can, according to a Democratic aide familiar with the discussions.
Schumer told Biden that cancelling the debt is “the right thing to do morally and economically,” the aide said on Tuesday.
Critics of the administration, including many Republican lawmakers, have said such a move is likely to add to inflation.
According to a study by New York Federal Reserve economists, forgiving $10,000 per student would amount to $321 billion of federal student loans and eliminate the entire balance for 11.8 million borrowers, or 31% of them.
Education Secretary Miguel Cardona said this week that a decision may come in the “next week or so.”
Student debt is most prevalent among Americans aged 25 to 34. Sixty-seven percent of student loan borrowers are under 40, according to the New York Federal Reserve.