President Joe Biden has revealed his plan to forgive up to $20,000 in student loan debt for most of the 47 million Americans with federal student loans, canceling more than $300 billion in debt spent on financing higher education.
“I made a commitment that we provide student debt relief, and I’m honoring that commitment today” Biden said in remarks delivered in the Roosevelt Room of the White House.
The plan states that if you have received a Pell Grant (for students with exceptional financial need) for your education, then $20,000 of your debt will be forgiven. If you have received other forms of federal student loans, then $10,000 of your debt will be forgiven. This only applies to those who have earned less than $125,000 per year in 2020 or 2021, or $250,000 if they are part of a household. Current and former students are both eligible.
The plan would also limit undergraduate loan payments to 5% of a borrower’s monthly income, cutting the cap in half.
Biden is set to announce that 43 million people will be eligible for debt forgiveness, with 20 million of them having their student loan debt canceled entirely. The administration official noted that 60 percent of borrowers obtained loans through pell grants, making the majority of eligible loan recipients eligible for up to $20,000 in canceled debt.
“These actions can help 95% of borrowers,” said Biden, adding that 45% of borrowers will have their student loan debt completely forgiven.