Millions of Americans were waiting to learn the fate of their federal student debt on Wednesday as President Joe Biden prepared to deliver on his campaign promise to provide up to $10,000 in debt cancellation. Details of the plan have been kept closely guarded, but borrowers who earn less than $125,000 a year would be eligible for the loan forgiveness, according to three people familiar with the decision. Biden is also set to extend a pause on federal student loan payments until January. If it survives legal challenges that are almost certain to come, Biden’s plan could offer a windfall to a swath of the nation in the run-up to this fall’s midterm elections. More than 43 million people have federal student debt, with an average balance of $37,667, according to federal data. Nearly a third of borrowers owe less than $10,000, and about half owe less than $20,000. Proponents say cancellation will narrow the racial wealth gap — Black students are more likely to borrow federal student loans and at higher amounts than others. Four years after earning bachelor’s degrees, Black borrowers owe an average of nearly $25,000 more than their white peers, according to a Brookings Institution study. Still, the action is unlikely to thrill any of the factions that have been jostling for influence as Biden weighs how much to cancel and for whom. Biden has faced pressure from liberals to provide broader relief to hard-hit borrowers, and from moderates and Republicans questioning the fairness of any widespread forgiveness. The delay in Biden’s decision has only heightened the anticipation for what his own aides acknowledge represents a political no-win situation. The people spoke on the condition of anonymity to discuss Biden’s intended announcement ahead of time. The continuation of the coronavirus pandemic-era payment freeze comes just days before millions of Americans were set to find out when their next student loan bills will be due. This is the closest the administration has come to hitting the end of the payment freeze extension, with the current pause set to end Aug. 31. Wednesday’s announcement was set for the White House after Biden returns from vacation in Rehoboth Beach, Delaware. The administration had briefly considered higher education schools in the president’s home state for a larger reveal but scaled back its plans. During the 2020 presidential campaign, Biden was initially skeptical of student loan debt cancellation as he faced off against more progressive candidates for the Democratic nomination. Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., had proposed cancellations of $50,000 or more. As he tried to shore up support among younger voters and prepare for a general election battle against President Donald Trump, Biden unveiled his initial proposal for debt cancellation of $10,000 per borrower, with no mention of an income cap. Biden narrowed his campaign promise in recent months by embracing the income limit as soaring inflation took a political toll and as he aimed to head off political attacks that the cancellation would benefit those with higher take-home pay. But Democrats, from members of congressional leadership to those facing tough reelection bids this November, have pushed the administration to go as broad as possible on debt relief, seeing it in part as a galvanizing issue, particularly for Black and young voters this fall. The frenzied last-minute […]

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