Biden to announce cancelation of $10,000 in student loan debt, extend pause on repayments
Biden is also expected to extend the pause on loan repayments through December.
The Biden Administration will announce a plan to cancel thousands of dollars in student loan debt for many borrowers, and extend the ongoing federal student loan payment pause for several more months.
President Joe Biden briefly detailed the planned announcement in a tweet on Wednesday, writing that his plan will involve forgiving $10,000 worth of student loans for individual borrowers who make $125,000 or less per year, as well as for households earning $250,000 or less per year. An additional $10,000 in debt forgiveness is planned for people who received Pell grants to attend college.
» READ MORE: What would Biden’s $10,000 student loan forgiveness mean for you?
Additionally, Biden’s message indicated, the Administration plans to add four months to the pause on student loan repayments, extending it through Dec. 31.
The plan would be the largest federal student loan forgiveness in history, The Hill reports. The effort could cost $300 billion to $980 billion over the next decade, and most relief would benefit borrowers in the top 60% of earners in the country, according to a Penn Wharton Budget Model estimate released on Tuesday.
The Biden Administration, however, will argue that 90% of the debt forgiveness will benefit households earning $75,000 a year or less, the New York Times reports.
To date, Biden has canceled about $32 billion in debt, Fortune reports. About 45 million people hold $1.7 trillion in student loan debt, according to a recent Federal Reserve estimate.
Student loan repayments, meanwhile, have been delayed a half-dozen times since the start of the pandemic under the Biden and Trump administrations. The current delay was set to expire at the end of this month. Previous pauses reportedly gave borrowers as long as month’s worth of notice about bill due dates, making this potential extension on the pause the narrowest window of notice borrowers have had to date, The Hill reports.
That has resulted in borrowers, loan services, and the Education Department “in limbo” regarding payments, according to the Wall Street Journal. In July, the Biden Administration advised loan companies to not send out billing notices to borrowers about resuming their loan repayments.
The cancelation of student loan debt was a key point during Biden’s campaign, but the $10,000 total is far below the $50,000 figure that some Democrats have pushed for throughout the pandemic. U.S. Rep. Maxine Waters (D., Calif.), for example, said in a letter to Biden in 2020 that canceling that amount of student loan debt “will enhance economic growth and financial freedom.”