White House eyes income cap on student loan forgiveness, has not studied how it may impact inflation

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White House eyes income cap for transferring student debt

FOX Business' Edward Lawrence has the details on 'America Reports.'

President Biden is considering whether to use income to determine eligibility as part of any student loan forgiveness program, the White House said Monday.

The president last week floated the possibility of eliminating $10,000 in debt per student borrower, likely through executive action.

During Monday’s White House press briefing, press secretary Jen Psaki was asked whether an income cap for any potential student relief program was under consideration.

White House press secretary Jen Psaki speaks during a press briefing at the White House, Wednesday, April 20, 2022, in Washington. (AP Photo/Evan Vucci)

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"There is," Psaki said.

It is unclear, at this point, what the maximum income would be for student loan forgiveness, should an income cap be included in any possible plans. Officials have reportedly floated the possibility of limiting the relief to people who earned less than $125,000 or $150,000 as individual filers the previous year. That would amount to a threshold of roughly $250,000 to $300,000 for couples who file their taxes jointly. 

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Psaki noted that income caps would be to ensure that student loan relief is "targeted at people who need help the most."

Psaki was also pressed on whether the White House has analyzed how potential student loan forgiveness could impact inflation.

President Joe Biden boards Air Force One at Brussels Airport in Brussels, Tuesday, June 15, 2021. Biden is en route to Geneva. (AP Photo/Patrick Semansky)

"I know there’s been outside analysis of that, but I don’t have any internal analysis at this point to preview for you," she said.

Last week, the president said he is "considering dealing with some debt reduction."

"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," Biden said. 

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Biden supported erasing $10,000 in student debt for most borrowers during his presidential campaign, but has raised questions about his legal authority to do so via executive order. Last year, the president requested a memo from the Education Department to determine whether he had the power to unilaterally cancel student loan debt.

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Meanwhile, the president extended the freeze on student loan payments through Aug. 31, citing the continued economic hardships brought on by the COVID-19 pandemic. Former President Donald Trump first issued a freeze on repayments in 2020.

Fox News' Megan Henney contributed to this report.