Without action, many Americans – for the first time in two years – will have to start paying off their student loans on September 1. However, multiple people familiar with White House policy discussions told ABC News that the loan freeze, first put in place under President Donald Trump during the disruptions of the COVID-19 outbreak, is expected to be extended. Debt relief talks, which were still ongoing Tuesday, have so far coalesced around forgiving about $10,000 for people making less than $125,000 a year — though the details are still being worked out. An announcement on federal student loans could come as early as Wednesday, sources familiar with the plan said. In an interview Tuesday afternoon, U.S. Education Secretary Miguel Cardona told ABC News that the long-awaited loan cancellation decision would come “soon,” but was vague on specifics. “We recognize that it’s an important issue for many families. And we want to make sure they get the information directly from the president,” Cardona said. The White House did not confirm further details, saying only that the president would have more to say before August 31. “As a reminder, no one with a federal loan has had to pay a dime on student loans since President Biden took office, and this administration has already canceled approximately $32 billion in debt for more than 1.6 million Americans — more than any administration in history,” White House spokesman Abdullah Hassan said, referring to debt relief for people who went to fraudulent universities and a restructured debt cancellation program for people who work in public service for 10 years. But more specific details about how much money will be forgiven and for whom are in high demand for the more than 45 million Americans who still have federal student loan debt. A third of federal borrowers owe less than $10,000, meaning they could see their debts wiped out entirely if this policy were implemented. Another 20% of borrowers, about 9 million people, will cut their debt by at least half. Activists take part in a rally outside the White House to call on US President Joe Biden to cancel student debt in Washington, DC, July 27, 2022. Anna Moneymaker/Getty Images Such a large override might seem like a big step for Biden without Congress, but legal and policy experts say it’s clearer: The move would be well within the president’s authority — it just hasn’t been used before because of the political implications. “The president has pretty broad authority under the higher education law,” said John Brooks, a law professor at Fordham University who focuses on federal fiscal policy. “A lot depends on the amount of cancellation. The smaller the amount of cancellation, the easier the question,” Brooks said. “Eliminating all student debt in one fell swoop may be tougher, but the president through the education secretary has the authority to adjust the principle of the loan amount that any borrower has.” Still, Biden could be taken to court — possibly by loan servicers who would lose revenue or by members of Congress who may believe Biden is spending money in ways that have not been appropriated by lawmakers. Outside experts also wonder how long student loan cancellation processes will take once a policy is announced — and how complicated it would be for borrowers to deal with, details that have not yet been released. Some fear that people could fall through the cracks if debt relief applications become too labor-intensive because of the future income cap. “The White House is going to ask the Department of Education to do something that is extremely difficult, and that is going to have the effect of denying debt relief to low-income, financially vulnerable people who have the hardest time navigating these complicated documents. processes,” Mike Pierce, executive director and co-founder of the Student Borrower Protection Center, a think tank that supports universal debt forgiveness, told ABC News. Pierce and other advocates for more progressive debt cancellation, including the NAACP, said the smoothest path would involve full and universal cancellation for everyone. “If the rumors are true, we have a problem. And tragically, we’ve experienced this so many times before,” NAACP President Derrick Johnson said in a statement Tuesday, reacting to details of the potential policy announcement. “President Biden’s decision on student debt cannot become the latest example of a policy that has left black people — especially black women — behind. That’s not how you treat black voters who turned out in record numbers and cast 90 percent of the vote. them in one go save democracy again in 2020,” Johnson said. But for many borrowers and supporters of student debt cancellation — particularly the nearly half of people with federal student loans who would see their debt wiped out or significantly reduced — Biden’s policy would still be cause for great celebration and be seen as a starting point for reforming the college and university system, where rising costs have become a major area of focus. For Michigan teacher Nick Fuller, a possible Biden announcement on student loans could come just before the winter financial crisis, when his heating bills skyrocket. Although Fuller worked hard in his early years out of school to pay off his school debt and then froze his loan for much of the pandemic, he worries that resuming payments beyond monthly living expenses could puts him on the edge. “I think things are going to get really tight in the winter because my utility bills are higher,” Fuller told ABC News. “I mean for January and February — the highs are zero and the lows are -20 [degrees] for almost two months.” The frigid temperatures might sting a little less if Biden forgives $10,000 of Fuller’s student loan bills, he said. “It’s about two-thirds of the debt I have left,” he said. That would make the payments “much more affordable and much more manageable in my situation,” he said. Easing the student debt crisis — as Trump’s education secretary, Betsy DeVos, also described the issue in 2018 — could also help a crippling teacher shortage that has left thousands of staff vacancies at the start of the latest school year, which has been seen by Fuller himself. President Joe Biden in the East Room of the White House, in Washington, on August 9, 2022. Evelyn Hockstein/Reuters, FILE Stung wages and rising inflation have left many teachers in limbo as the deadline for loan waivers looms. And because black students are among the fastest-growing groups of people taking on debt, advocates argue that canceling some student loans could also begin to address racial disparities. Sharefah Mason, the dean of Educator Certification at Dallas College, feels this effect firsthand as a black woman with student debt. She leads the apprenticeship component of a program that pairs students with residency partners to ensure they earn while they learn, effectively reducing education debt for aspiring teachers. “I’m carrying $70,000 in student loans,” Mason told ABC News. “Data Shows Student Loan Debt Exponentially and Disproportionally Affects Black Women.” The average amount of student debt accumulated by black women is more than any other group at $38,800, according to the Education Trust, a nonprofit focused on education reform. But Mason’s program, the first full-time paid teacher apprenticeship in the state of Texas, allows students to earn one of the cheapest college degrees in the state, Mason said. The goal, she said, is to help future educators break down the generational barriers she has faced as a Black woman. Mason said they “won’t have to worry about student loan debt,” which could open more doors for minority communities that historically haven’t had the means to access higher education. “My students will be able to earn, as first-year teachers in the city of Dallas, over $60,000,” Mason said. For the nation’s most impacted borrowers, Mason said, “a space needs to be created for them to make enough money to pay off their student loans without having to sacrifice their ability to build generational wealth for their families.” Mariam Khan and Benjamin Siegel of ABC News contributed to this report.
