WASHINGTON (AP) — President Joe Biden on Wednesday announced detailed plans to deliver on a campaign promise to provide $10,000 in student debt cancellation for millions of Americans — and up to $10,000 more for those with the greatest financial need — along with measures to lower the burden of repayment for their remaining federal student debt.
Borrowers who earn less than $125,000 a year, or families earning less than $250,000, would be eligible for the $10,000 loan forgiveness, Biden announced. For those who also receive Pell Grants, which are reserved for undergraduates with the most significant financial need, the federal government would cancel up to an additional $10,000 in federal loan debt.
“Both of these targeted actions are for families who need it the most: working and middle class people hit especially hard during the pandemic,” Biden said in remarks at the White House Wednesday afternoon.
Biden is also extending a pause on all federal student loan payments for what he called the “final time” through the end of 2022.
If his plan survives legal challenges that are almost certain to come, it could offer a windfall to many in the run-up to this fall’s midterm elections. More than 43 million people have federal student debt, with an average balance of $37,667, according to federal data. Nearly a third of borrowers owe less than $10,000, and about half owe less than $20,000. The White House estimates that Biden’s announcement would erase the federal student debt of about 20 million people.
“That’s 20 million people who can start getting on with their lives,” Biden said. “All this means, people can start to finally crawl out from under that mountain of debt. To get on top of their rent and utilities. To finally think about buying a home or starting a family or starting a business.”
Proponents say cancellation will narrow the racial wealth gap — Black students are more likely to borrow federal student loans and at higher amounts than others. Four years after earning bachelor’s degrees, Black borrowers owe an average of nearly $25,000 more than their white peers, according to a Brookings Institution study.
Biden has faced pressure from liberals to provide broader relief to hard-hit borrowers, but also from Republicans questioning the fairness of any widespread forgiveness.
The White House emphasized that no one in the top 5% of incomes would see any loan relief.
But top Republicans were not persuaded.
Senate GOP leader Mitch McConnell said, “President Biden’s inflation is crushing working families, and his answer is to give away even more government money to elites with higher salaries. Democrats are literally using working Americans’ money to try to buy themselves some enthusiasm from their political base.”
In fact many Democrats, from congressional leaders to others facing tough reelection bids this November, have pushed the administration to go as broadly as possible on debt relief, seeing it in part as a galvanizing issue, particularly for Black and young voters.
