Biden presents a plan to reduce student loan burden.
For debtors earning up to $125,000 annually, President Joe Biden outlined a plan to forgive $10,000 of student loan debt.
President Joe Biden on Wednesday unveiled a plan to cancel debt for a portion of Americans and maintain the pandemic-era pause on repayments, which he has openly considered since his time as a candidate. The announcement came ahead of another deadline on the restart of payments for America’s $1.7 trillion in federal student loans.
Biden explained his idea to forgive tens of thousands of dollars for people making less than $125,000 per year while speaking from the Roosevelt Room of the White House.
According to Biden, “an entire generation is now burdened with unsustainable debt in return for at least trying to earn a college degree.” Even if you graduate, the weight will be too great.
You might not be able to attain the middle-class lifestyle that a college education formerly guaranteed.
He continued, “The pandemic only made things worse,” noting that many people put off starting families or can’t afford to buy homes in part due to their student loan debt.
As part of Wednesday’s announcement on student loan forgiveness, anyone who used Pell Grants—grants awarded to low-income borrowers—to pay for education may be eligible for up to $20,000 in debt forgiveness. Other borrowers of student loans who do not have Pell Grants will still be eligible for loan forgiveness of up to $10,000.
People who made less than $125,000 annually, or $250,000 as a household, in either the 2020 or 2021 tax year are eligible for both forgiveness options.
A senior administration official explained the plan to reporters on a conference call on Wednesday. “If all borrowers claim the relief to which they’re entitled, 43 million federal student loan borrowers will benefit, and of those, 20 million will have their debt completely cancelled,” the official said.
60% of borrowers get Pell Grants, according to the White House, making the majority of borrowers qualified for the bigger forgiveness. Additionally, because Pell Grant recipients must demonstrate that their family can only afford to spend a specific amount every year toward their college expenses,
According to the Biden administration, concentrating on these receivers of aid will assist target those with the greatest financial need.
In order to enable time for the transition back to repayment, Biden on Wednesday also announced an extension of the suspension on student loan payments through December 31, 2022, the final extension.
The first information about the purported “Student Debt Relief Plan” was made public by Biden earlier on Wednesday through a fact sheet shared on Twitter.
As promised during the campaign, Biden said in the article, “my Administration is proposing a proposal to provide breathing room to working and middle class families as they get ready to resume federal student loan payments in January 2023.”