By Diana Glebova, National Review
President Joe Biden is set to “forgive” up to $10,000 in federal student debt for those making under $125,000 annually, and $20,000 for Pell grant recipients, transferring the cost of the loans to the American public, the White House announced Wednesday.
In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023.
I'll have more details this afternoon. pic.twitter.com/kuZNqoMe4I
— President Biden (@POTUS) August 24, 2022
Biden’s decision marks the first time a president has canceled federal student-loan debt in such a broad capacity, and comes months before the midterm elections. He had campaigned on canceling up to $10,000 per borrower during the presidential race, but there was no mention of an income cap.
Biden is also set to extend the federal student loan freeze for a final time until December 31.
Lawmakers, including Nancy Pelosi, have argued that Biden’s executive order, is unconstitutional and goes outside the rights of the executive branch.
Congress, not the president, is the only body that can cancel student debt, Pelosi said in July of 2021, arguing that “the president can’t do it.”
“Not everybody realizes that, but the president can only postpone, delay but not forgive” student loans, she added.
The Department of Education came to the same decision, arguing that the executive branch “does not have the statutory authority to cancel, compromise, discharge, or forgive, on a blanket or mass basis, principal balances of student loans, and/or to materially modify the repayment amounts or terms thereof.”
Senate Majority Leader Chuck Schumer told Biden to provide as much relief as possible in a phone call Tuesday night, according to Politico, saying it’s “the right thing to do morally and economically.”
The total estimated cost for Biden’s one-time cancellation is $300 billion, according to a study released Tuesday by the Wharton School of business at the University of Pennsylvania. The cost would increase to $330 billion if the program continues over the standard ten-year window, the study showed.
Republican lawmakers have sounded the alarm over Biden’s decision, saying that it will lead to inflation.
Payments for most student loan borrowers have been stalled since March of 2020, when Congress, and then former president Donald Trump, paused the payments due to predicted financial hardships stemming from the Covid-19 pandemic. Biden has extended the pause four times, and the freeze was expected to expire on August 31.
Read more at National Review.