By Nathalie Voit
In remarks from the White House delivered on Aug. 24, President Joe Biden announced he would cancel $10,000 in federal student loans for approximately 43 million borrowers.
Pell Grant recipients would be eligible for up to $20,000 in loan forgiveness.
As per the Education Department, the targeted relief would go to individuals earning less than $125,000 a year or $250,000 for households or married couples. Borrowers earning above this income threshold would not be eligible for financial relief. The White House said that includes the top 5% of income earners.
“Both of these targeted actions are for families who need it the most — working and middle-class people hit especially hard during the pandemic making under $125,000 a year,” the President said in a speech on Wednesday. “No high-income individual or high-income household in the top 5% of incomes will benefit from this action. Period. About 90% of the eligible beneficiaries make under $75,000 a family.”
The long-awaited announcement is expected to help 95% of borrowers. According to a White House fact sheet, nearly 20 million people, or 45% of borrowers, would see all their student loans fully wiped out.
“That’s 20 million people who can start getting on with their lives,” Biden said.
Importantly, private student loan holders would be excluded from the plan.
The student loan forgiveness plan is part of President Biden’s broader campaign commitment to deliver financial relief to lower- and middle-income Americans struggling with mountains of debt.
According to the Biden-Harris administration, student loan borrowers collectively owe an astounding $1.7 trillion.