When will President Joe Biden make a decision on student loan forgiveness?

An announcement from President Biden on his intention to write off student loan debt was expected in late May, but the tragic school shooting in Uvalde, Texas forced a change of plans. According to the Wall Street Journal, White House officials say the announcement of the pardon should take place this summer, in July or August.

The more than 43 million Americans in student loan debt are anxiously awaiting what the president will decide with a payment moratorium expiring on September 1. A Consumer Financial Protection Bureau report in April warned that millions of people could be at risk of delinquency or default when payments resume frozen since March 2020.

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What did President Biden say about canceling student debt?

During his run for president, then-candidate Biden talked about forgiving a minimum of $10,000 per federal student loan debt borrower. He resisted calls from fellow Democrats in Congress to wipe out all student debt or forgive at least $50,000 per person.

“I’m not looking at a $50,000 debt reduction, but I am seriously considering whether or not there will be further debt forgiveness,” Biden told reporters in late April. Although his decision was not made within the two-week deadline he gave at the time, a Washington Post article said that he had hoped to unveil his plan at the start of the University of Delaware in late May.

According to the report, three people familiar with the situation said he was considering canceling up to $10,000 but limiting access to aid. Only single borrowers earning less than $150,000 a year, or less than $300,000 for married couples filing jointly, would be eligible for federal debt forgiveness.

Still, this would cover around 97% of borrowers according to 2019 data. The plan would cost around $230 billion, but officials warned some details could change before the decision is made official.

Millions of people could struggle to repay their loans when the moratorium ends

The Consumer Financial Protection Bureau released a report in April that found millions of people with student loans would be at risk of financial calamity when repayments begin in September. Before the pandemic, nearly a quarter of borrowers were past due or in default when the pause was put in place.

The analysis looked at five potential risk factors for about 34 million borrowers, or about 80% of the total. The agency estimates that 15 million borrowers have at least one of these risk factors, and more than 5 million borrowers have at least two of these risk factors.

One might worry about their ability to repay other debts they also have. Before the pandemic, six percent were delinquent on another form of credit they had taken out. This has improved during the student loan repayment freeze, but “doesn’t necessarily mean they’ll be better prepared” once they have to make payments on their student loans. Especially since the pandemic relief programs have come to an end.

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