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Biden nears decision on student loan cancellation, moratorium extension

The president is expected to cancel $10,000 per borrower making $125,000 a year or less.

WASHINGTON — President Joe Biden is expected to announce Wednesday at the White House that he will cancel $10,000 in federal student loans per borrower making $125,000 a year or less.

He is also expected to extend the federal student loan payment pause for several more months, according to multiple sources familiar with the matter.

Although Biden had previously said he would make an announcement on student debt cancellation by the end of the month, the White House has insisted that no final decision had been made yet.

"The President will have more to say on this before August 31,"  White House spokesman Abdullah Hasan said. "As a reminder, no one with a federally-held loan has had to pay a single dime in student loans since President Biden took office, and this Administration has already cancelled about $32 billion in debt for more than 1.6 million Americans — more than any Administration in history."

It is not clear whether there will be additional criteria for qualifying for student loan forgiveness.

The expected announcement comes as Biden is facing criticism from student debt relief advocates over his drawn-out decision-making process that has left millions of borrowers unclear about whether they would have to start making payments when the moratorium expires at the end of August.

Although Biden is expected to follow through on his key campaign promise to address student debt, the move falls short of the $50,000 in cancellation that some Democrats have called for.

Senate Majority Leader Chuck Schumer, D-N.Y., spoke with Biden by phone Tuesday night "to make a final push to the president to cancel as much student loan debt as he can,” a Democrat familiar with the conversation told NBC News. Schumer says “it’s the right thing to do morally and economically,” the source said.

White House chief of staff Ron Klain on Friday spoke with Schumer and Democratic Sens. Elizabeth Warren of Massachusetts and Raphael Warnock of Georgia, asking them to “do as much as they can” on this issue, according to a source familiar with the call. All three senators have been vocal supporters of widespread student debt cancellations.

Some debt relief advocates have also been pushing the White House not to means-test cancelation, arguing that qualifying criteria such as an income cap would make implementation difficult.

Roughly 45 million Americans have student debt. The Federal Reserve estimated that in the second quarter of 2022, Americans owed more than $1.7 trillion in student loans.