President Biden, Vice President Harris, and the U.S. Department of Education have announced a three-part plan to help working and middle-class federal student loan borrowers. The administration’s aim is to help borrowers transition back to regular payment as pandemic-related support expires. The loan-forgiveness plan will offer up to $20,000 of student debt-relief.
“Both of these targeted actions are for families who need it the most,” the president said in a conference held at the White House on Wednesday (August 24).
In a tweet, Biden said he’ll cancel up to $20,000 for recipients of Pell Grants and $10,000 for those without it. The relief will be limited to Americans earning under $125,000 per year, or $250,000 for married couples or heads of households.
“In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023. I’ll have more details this afternoon,” Biden tweeted along with an image outlining the plan.
According to the Federal Student Aid Education Department, student debt-relief will be capped at the amount of a borrower’s outstanding debt. The president also stated that he will extend the payment deferment on federal student loans “one final time” through December 31, 2022.
Per CNBC, Biden’s decision to move ahead with $10,000 in student debt cancellation for borrowers who earn under $125,000 will cost the federal government around $244 billion, according to higher education expert Mark Kantrowitz. The $20,000 in relief for Pell Grant recipients may add around $120 billion to the government’s costs.
The long-awaited decision to wipe out hundreds of billions of dollars in student debt follows years of advocacy and discussions.