US President Joe Biden canceled up to $10,000 of student debt for many borrowers on Wednesday, August 24, meeting a key pledge he made on the campaign trail.
Biden is also canceling up to $20,000 for Americans who received what are known as Pell Grants, which are given to undergraduates with acute economic needs. The relief applies to individuals who make up to $125,000 per year, or $250,000 for married couples or heads of households.
The president is also pausing student loan payments “one final time” through Dec. 31. The loan forgiveness is estimated to affect tens of millions of people across the country.
“All this means people can start finally crawl out from under that mountain of debt,” Biden said in remarks delivered at the White House.
The president pushed back on critics who question the wisdom of student loan forgiveness, particularly regarding questions about whether it is fair to those who have paid them back, including some who did so by pinching pennies.
But Biden maintained that his actions will not only bolster the economy but also benefit working-class Americans.
A lot of these folks are in small businesses, are working-, middle-class families. They needed help. It was the right thing to do. So the outrage over helping working people with student loans I think is just single simply wrong, dead wrong.
What It Means
The move will be enough to wipe out some student debt entirely: 15 million of the 43 million people with federal loans owe less than $10,000, and those borrowers are typically the most likely to fail to pay their loans back.
In all, the plan will eliminate student debt for about 20 million people, according to an analysis provided by the Education Department, and decrease monthly payments by an average of $250 for borrowers with a remaining balance who are on standard 10-year payment plans.
Only people who earned less than $125,000 as an individual or $250,000 as part of a married couple in 2020 or 2021 will be eligible for forgiveness.
The Education Department said in a press release Wednesday that 8 million borrowers may be able to qualify automatically because the Education Department already has information about their income. That still means the majority of people will have to apply.
The application is not yet available, but the department said it will be made public before the end of the year.