Biden unveils plan to cancel $10,000 in student loan debt for millions

Millions of Americans received welcome news on Wednesday when Joe Biden delivered on a campaign promise to provide $10,000 in student debt forgiveness.

Borrowers who earn less than $125,000 a year will be eligible for loan forgiveness, with those whose low incomes qualified them for federal Pell Grants receiving up to $20,000 in relief. About a third of US undergraduate students receive Pell Grants.

Biden also extended a pause on federal student loan payments through the end of the year. The White House said it would be the last pause, and borrowers should expect to resume payments in January.

Biden also proposed a new income-driven repayment plan that would cap loans for low-income future borrowers and introduce fixes to the loan forgiveness program for non-profit and government workers.

Biden noted that the federal government gave loans to small businesses during the Covid pandemic.

The US has a long history of student debt, the vast majority owed to the federal government, which has been offering loans for college since 1958. US student debt has more than tripled over the last 16 years.

Biden has faced pressure from liberals to provide broader relief. The cancellation falls short of the $50,000 many activist groups wanted. Some groups have called for full student debt cancellation.

Administration officials claimed the plan could reduce inflation. The top Senate Republican, Mitch McConnell, argued that it would worsen the problem.

During the 2020 presidential campaign, Biden was initially skeptical of student debt cancellation as he faced progressive candidates including Warren and Bernie Sanders, the democratic socialist senator from Vermont.

As he tried to shore up support among younger voters, Biden unveiled a proposal for debt cancellation of $10,000 per borrower, with no mention of an income cap. That campaign promise was narrowed in recent months by embracing the income limit.

Democrats pushed the administration to go as broad as possible, seeing debt relief as a galvanizing issue, particularly for Black and young voters.

Powell noted that support for debt cancellation and college affordability has grown. Those who go to college make on average $30,000 more a year than those with just a high school degree.