(Bloomberg) -- President Joe Biden will make his long-awaited announcement on student debt relief this week and yet some of the biggest drivers behind the forgiveness plan will be left disappointed.
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Biden plans to unveil his approach Wednesday, according to people familiar with the timing. For several months, he's been weighing forgiving $10,000 per borrower in student debt and capping the relief at incomes of $125,000 to $150,000 a year.
But advocates -- including progressive lawmakers, civil rights groups and labor leaders -- have pressured the White House to forgive higher debt-loads, arguing they are disproportionately carried by Black or lower-income students. These leaders and groups, including the NAACP, would like Biden to forgive $50,000 per borrower.
"If the rumors are true, we've got a problem. And tragically, we've experienced this so many times before," NAACP President Derrick Johnson said in a statement on Tuesday. "This is not how you treat Black voters who turned out in record numbers and provided 90% of their vote to once again save democracy in 2020."
Senate Majority Leader Chuck Schumer, in a telephone conversation on Tuesday night, urged Biden to cancel as much debt as possible, according to a Democrat familiar with the call.
Biden allies and advocates also expect the president to extend the pause on repaying student loan debt for a few more months, likely through December 2022. That would take the repayment freeze beyond the November midterm elections, in which Democrats are hoping to stave off a loss of their slim House and Senate majorities. Support from young voters could help boost Democrats' showing in the upcoming balloting.
Read more: Biden's Slow-Walk on Student Loans Means Pressure to Go Big
Biden and his top White House aides have considered forgiving a higher amount of debt for low-income borrowers, such as Pell grant recipients or people on Social Security who are still paying student loans.
The substance of Wednesday's announcement is being closely guarded by the White House. The president's decision has been long anticipated as he grapples with delivering targeted relief while weighing any political or economic fallout, including on already-rampant inflation.
Student loan forgiveness would cap a series of major policy accomplishments for Biden heading into the midterms: He's signed a tax, health care and climate package dubbed the Inflation Reduction Act as well as a semiconductor subsidy bill aimed at boosting US manufacturing.
Still, the loan announcement has the potential to be polarizing -- one official, speaking on condition of anonymity, said Biden will face blowback no matter what he does.
Former top Democratic economic aides have warned about the inflationary impact of a broader move. Former Treasury Secretary Larry Summers has cautioned that it would fuel price growth and said the "worst idea" would be to extend a pause on payments. Inflation is Biden's foremost political headwind and he's been clamoring to try and ease price pressures while the Federal Reserve moves to sharply hike rates, raising the risk of a recession.
Read more: Student-Loan Borrowers Sweat Aug. 31 Deadline, Wait for Biden
Progressives have batted away concerns debt forgiveness would fuel inflation.
"Canceling $10,000 in student debt is not the decisive factor in battling inflation," Rose Khattar, associate director of economic analysis at the Center for American Progress, said in a statement Tuesday. "Instead, it is a critical step in helping millions of Americans and their families improve their immediate and future economic security."
Forgiving student loan debt will cost between $300 billion and $980 billion over 10 years, depending on the scope, an analysis released Tuesday found.
Student loan relief would provide disproportionate benefits to working- and middle-class households, according to data in the analysis by the Penn Wharton Budget Model. The poorest fifth of Americans, earning less than about $29,000 per year, would get a much smaller boost, while the top 10% would be almost entirely excluded depending on how relief is designed.
If Biden forgives as much as $10,000 per borrower with a $125,000 income cap, those earning from $29,000 to $141,000 -- a group that excludes the bottom fifth and top fifth of earners -- would reap nearly three-quarters of the benefits. The middle 60% would get about 70% of the benefit from a plan that forgives up to $50,000 and lifts the income cap entirely.
While rich Americans are excluded if Biden imposes an income cap, the top 5% of earners -- making more than $321,699 per year -- would get 2.4% of the benefit with no cap and relief of up to $50,000.
The Biden administration has already canceled $32 billion in total debt, including by targeting relief to institutions that had predatory or misleading practices. The current payment pause expires at the end of the month.
"From day one, we've been really focused on making sure we're protecting our students and our borrowers," Education Secretary Miguel Cardona told NBC's "Meet the Press" on Sunday. "We know August 31st is a date that many people are waiting to hear something from. We've been talking daily about this. And I can tell you that American people will hear within the next week or so from the president."
(Updates with Schumer-Biden conversation, in fifth paragraph.)
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