The White House is considering forgiving at least $10,000 in student loans per borrower through executive action, according to people familiar with the matter, with momentum increasing as President Joe Biden seeks ways to bolster voter enthusiasm ahead of the November midterms.
The move would come with considerable risks. Some deficit hawks worry it could worsen the inflation that is already weighing heavily on Democrats’ chances of maintaining control of the House and Senate. But any move may not go far enough to appease progressives and other advocates.
The administration has not yet settled on the proposal’s contours, but aims for the relief to be targeted to lower- and middle-income individuals, according to people familiar with the internal discussions. Biden himself confirmed Thursday that he plans to do something, but said he is not weighing $50,000 in forgiveness per borrower.
That figure has been pushed by House progressives and Democratic Senator Elizabeth Warren, along with several advocacy and civil rights groups. Former top Warren aides, including Julie Margetta Morgan and Bharat Ramamurti, now hold top jobs inside the Biden administration, working on the issue at the Department of Education and National Economic Council.
The president proposed canceling $10,000 per borrower during the presidential campaign, but his White House has been slow to follow through on his promise. It has extended a temporary freeze on student debt payments that was enacted in the earliest days of the pandemic, a move that has allowed it to kick the can down the road on the issue.
When debt payments were frozen in 2020, it was part of a wider effort to prop up demand in the pandemic slump. That rationale doesn’t apply now, with the Federal Reserve battling soaring inflation and trying to rein in spending, not boost it.
Aides say the president had hoped Congress would take legislative action and his team has been divided on the merits of broad student debt forgiveness.
The White House is looking for ways to excite progressives and other crucial voter groups before the midterms, where lackluster polling for Democrats shows the party faces an uphill battle against a supercharged Republican base.
Canceling student debt polls tremendously well with voters under the age of 45, particularly young men who may have borrowed money for community or technical college, said Celinda Lake, president of Lake Research Partners, a firm that works with Democratic candidates and interest groups and advised the Biden presidential campaign. A Morning Consult/Politico poll from early April showed that 47% of those surveyed called student debt relief a top or very important issue.
Such a move could have particular impact for Black Americans, who are disproportionately affected by student loan debt. Statistics from the Education Data Initiative shows the average Black college graduate owes $25,000 more than white peers.
Nearly half of Black students owe an average of 12.5% more than they borrowed just four years out of college. During that same period, 83% of white graduates owe 12% less than they borrowed. Over half of Black student borrowers report that their net worth is less than their student debt balance.