President Joe Biden this week announced that he will forgive $10,000 in federal student debt for most borrowers, fulfilling a campaign pledge and delivering financial relief to millions of Americans.
Biden will cancel up to $20,000 for recipients of Pell Grants.
“Both of these targeted actions are for families who need it the most,” the president said in remarks from the White House on Wednesday afternoon.
The relief will be limited to Americans earning under $125,000 per year, or $250,000 for married couples or heads of households. The relief is also capped at the amount of a borrower’s outstanding eligible debt, per the Department of Education.
The president will also extend the payment pause on most federal student loans “one final time” through the end of the year.
In his remarks, Biden said that 95% of borrowers would benefit from the plan, or about 43 million people. Of those, over 60% are Pell Grant recipients.
In all, nearly 45% of borrowers, or almost 20 million people, would have their debt fully canceled, Biden said.
“That’s 20 million people who can start getting on with their lives,” Biden said.
“All of this means people can finally start to crawl out from under that mountain of debt. To get on top of their rent and their utilities. To finally think about buying a home or starting a family or starting a business.”
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.
Kantrowitz has suggested that more than 40 million Americans are in debt for their education, owing a cumulative $1.7 trillion, a balance that far exceeds outstanding credit card or auto debt. Skyrocketing higher education costs coupled with stagnant wages have caused the amount of student debt people graduate with to soar. Today, the average balance is over $30,000, up from $12,000 in 1980.