Biden is expected to make an announcement on student loan relief on Wednesday

Federal student loan interest rates go up on July 1

Rising interest rates on federal student loans make borrowing money for college more expensive

04:04 a.m

President Biden is expected to make an announcement on student loan relief on Wednesday, according to two sources familiar with the matter.

However, it is not yet clear what exactly the president will announce in the end. Canceling $10,000 in student loan debt for borrowers making up to $125,000 is one possibility, a source familiar with the discussions said. NBC News first reported the timing of Mr. Biden’s statement.

It’s also possible that the administration will simply extend the pause on student loan payments again for the time being and wait to make an announcement to cancel any student loan debt.

Sources said the president said he would make a decision before August 31 and is still on track to do so.

Penn Wharton budget model analysis concludes $10,000 in student loan debt forgiveness for those earning up to $125,000 a year will cost nearly $300 billion in the first year. It also found that more than two-thirds of the debt relief would help the top 60 percent of Americans.

Low-income Americans who have never attended college and are struggling financially amid record high inflation will not benefit from any debt cancellation, critics of student debt cancellation say. Erasing some student loan debt also won’t address rising college costs, which have historically outpaced inflation in recent decades.

The student loan freeze began under the Trump administration at the start of the pandemic, and Mr. Biden has frozen student loan payments a total of four times since taking office. The current break ends after August 31, after which borrowers will have to start repaying their debt again if there is no new extension.

Stephen Portnoy, Nancy Cordes, Christine Brown and Kathryn Watson contributed to this report.

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