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 on Tuesday.
The current 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 current pause on student loan repayment through 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 is a topic that could shore up popularity before November’s midterm congressional elections with younger and highly educated voters, who tend to lean Democratic.
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, or 31%, of borrowers.
Education Secretary Miguel Cardona earlier this week said a decision on the subject 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.
