As President Joe Biden pondered over the specifics to address student debt, Treasury Secretary Janet Yellen was skeptical of a large-scale student-loan forgiveness plan.
In May, when she was the chair of the Federal Reserve Board, she said that student loan relief could be good for the economy. During a time when inflation has hit highs not seen since the early 1980s, she felt that a large cancellation of debt would have a huge impact on the economy.
After taking office last year, Biden began to hear from economists who were concerned about a large-scale forgiveness program. For more than a year, the president said his administration was studying the issue, and in one of his first actions in office, he extended the student loan payment pause for most federal student loan borrowers.
According to the report, Biden was unsure of what to do, as he sought to understand the opinions of people who were not in favor of a student-loan forgiveness plan. He was skeptical of his authority to cancel as much as $50,000 in student debt in a February town hall.
According to people close to the first lady, she had reservations about the plan.
While living at the White House, Biden has been lobbying for tuition-free community college, which was poised to be included in the legislation. The tuition plan was axed in order to reduce the cost of the bill.
Several House Democrats tried to convince Biden's wife that the president's support of tuition-free community college wouldn't be affected by the student loan cancellation plan, according to The Washington Post.
During the 2020 presidential campaign, Biden promised that Vice President Harris would be a full governing partner. An administration official who spoke with The Times said that in February, Harris ordered her staff to write up a memo detailing Biden's concerns about loan cancellation and add notes to address the president's points.
According to the report, Biden had some reservations about the plan being seen as one benefiting private elite schools, and Harris' team sought to counter that by noting that only a small percentage of federal loan borrowers attend Ivy League schools.
The Harris memo said that an executive order was already in place that paused most federal student loan payments.
Biden said on Wednesday that he would forgive federal student-loan debt for borrowers earning under $125,000 per year, with up to $20,000 in relief for those who got a grant. Biden's fifth and final extension of the student-loan payment pause through December 31 is critical in the plan.
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