Biden Decision on Student-Loan Forgiveness Unlikely Until Later in Summer, Officials Say

The officials said Mr. Biden is likely to announce his plans in July or August, closer to when the pandemic-related pause in federal student loan payments is scheduled to lapse, as the president and his senior advisers continue to weigh the political and economic fallout of any such move. The Biden administration earlier this year extended the pause, which has been in effect since March 2020, until Sept. 1.

The delay means the roughly 40 million people who owe about $1.6 trillion in federal student debt may have to wait to find out whether they may see all or part of their loans erased.

The White House declined to comment on the internal discussions. “The administration is continuing to assess options for cancellation and no decision has been made,” a White House official said.

Mr. Biden has long been skeptical of using his executive authority to wipe away student loan debt. Officials said he remains concerned about the possible effects the move could have on record inflation, cautious about doing anything that could be perceived as contributing to high prices. Some people close to Mr. Biden said he had nonetheless warmed to the idea in recent months as advocates inside and outside the administration made impassioned pleas for him to take action.

Hanging over all of the discussions is November’s midterm elections, in which Democrats are facing the prospect of widespread losses. The president’s advisers are weighing the political boost that could come from forgiving loans among young people and others against the backlash from voters who didn’t go to college, don’t have loans or already paid them off.

Some Republican lawmakers have accused Democrats of using debt relief as an irresponsible play for votes.

White House officials have drawn up a range of proposals, officials and others familiar with the matter said, and are waiting on the president to make a final decision. The president’s advisers were hesitant to predict where Mr. Biden might land. But people familiar with the internal discussions said the most likely outcome appeared to be debt forgiveness in the range of $10,000 per borrower. Individuals making less than about $125,000 a year would be eligible for the program, though that figure is in flux, the people said.

Mr. Biden has already ruled out forgiving up to $50,000 in student debt per borrower, the proposal backed by Massachusetts Sen. Elizabeth Warren and other prominent progressive Democrats.

“I am not considering $50,000 debt reduction. But I’m in the process of taking a hard look at whether or not there…will be additional debt forgiveness, and I’ll have an answer on that in the next couple of weeks,” Mr. Biden told reporters in late April.

The president’s advisers have discussed other restrictions, including limiting any debt-forgiveness plan to undergraduates or people who attend public universities. Some of Mr. Biden’s advisers have made the case for broad forgiveness, arguing, for example, that it would be a mistake to exclude from the program teachers and others with advanced degrees who typically make little money.

Another factor complicating the decision: How to implement a large new government program. The Education Department is already burdened with the existing slate of more narrow loan forgiveness programs for people who work in public service-related jobs or who were defrauded by for-profit schools. A wider loan-forgiveness program could require millions of Americans to file paperwork to the government detailing their income.

The Education Department has canceled around $25 billion in student loans so far through a piecemeal approach that has focused on borrowers defrauded by for-profit schools, disabled students, and those enrolled in public service loan-forgiveness programs.

“If there is a decision to do broad-based [loan forgiveness], obviously that is something that would help a lot of borrowers,” James Kvaal, the No. 2 official at the Education Department, said on Monday at an event hosted by the Bipartisan Policy Center. “At the same time, and I think the students and other advocates of broad-based would tell you, we also need permanent solutions.”

—Ken Thomas contributed to this article.

The officials said Mr. Biden is likely to announce his plans in July or August, closer to when the pandemic-related pause in federal student loan payments is scheduled to lapse, as the president and his senior advisers continue to weigh the political and economic fallout of any such move. The Biden administration earlier this year extended the pause, which has been in effect since March 2020, until Sept. 1.

The delay means the roughly 40 million people who owe about $1.6 trillion in federal student debt may have to wait to find out whether they may see all or part of their loans erased.

The White House declined to comment on the internal discussions. “The administration is continuing to assess options for cancellation and no decision has been made,” a White House official said.

Mr. Biden has long been skeptical of using his executive authority to wipe away student loan debt. Officials said he remains concerned about the possible effects the move could have on record inflation, cautious about doing anything that could be perceived as contributing to high prices. Some people close to Mr. Biden said he had nonetheless warmed to the idea in recent months as advocates inside and outside the administration made impassioned pleas for him to take action.

Hanging over all of the discussions is November’s midterm elections, in which Democrats are facing the prospect of widespread losses. The president’s advisers are weighing the political boost that could come from forgiving loans among young people and others against the backlash from voters who didn’t go to college, don’t have loans or already paid them off.

Some Republican lawmakers have accused Democrats of using debt relief as an irresponsible play for votes.

White House officials have drawn up a range of proposals, officials and others familiar with the matter said, and are waiting on the president to make a final decision. The president’s advisers were hesitant to predict where Mr. Biden might land. But people familiar with the internal discussions said the most likely outcome appeared to be debt forgiveness in the range of $10,000 per borrower. Individuals making less than about $125,000 a year would be eligible for the program, though that figure is in flux, the people said.

Mr. Biden has already ruled out forgiving up to $50,000 in student debt per borrower, the proposal backed by Massachusetts Sen. Elizabeth Warren and other prominent progressive Democrats.

“I am not considering $50,000 debt reduction. But I’m in the process of taking a hard look at whether or not there…will be additional debt forgiveness, and I’ll have an answer on that in the next couple of weeks,” Mr. Biden told reporters in late April.

The president’s advisers have discussed other restrictions, including limiting any debt-forgiveness plan to undergraduates or people who attend public universities. Some of Mr. Biden’s advisers have made the case for broad forgiveness, arguing, for example, that it would be a mistake to exclude from the program teachers and others with advanced degrees who typically make little money.

Another factor complicating the decision: How to implement a large new government program. The Education Department is already burdened with the existing slate of more narrow loan forgiveness programs for people who work in public service-related jobs or who were defrauded by for-profit schools. A wider loan-forgiveness program could require millions of Americans to file paperwork to the government detailing their income.

The Education Department has canceled around $25 billion in student loans so far through a piecemeal approach that has focused on borrowers defrauded by for-profit schools, disabled students, and those enrolled in public service loan-forgiveness programs.

“If there is a decision to do broad-based [loan forgiveness], obviously that is something that would help a lot of borrowers,” James Kvaal, the No. 2 official at the Education Department, said on Monday at an event hosted by the Bipartisan Policy Center. “At the same time, and I think the students and other advocates of broad-based would tell you, we also need permanent solutions.”

—Ken Thomas contributed to this article.