President Joe Biden on Wednesday announced the cancellation of up to $20,000 in student loan debt for certain borrowers, belatedly following through on a campaign issue that has remained a top priority for progressive Democrats.
Biden also announced a continuation of the freeze on student loan payments until January. The payments were originally paused by President Donald Trump in response to the coronavirus pandemic, and Biden had previously extended it until Aug. 31.
Roughly 45 million student loan borrowers collectively owe $1.6 trillion. As many as 43 million borrowers could benefit from the plan, the White House said Wednesday, and 20 million could see their debt completely canceled.
Only recipients of Pell Grants, which are awarded based on need, would be eligible for the full $20,000 in debt cancellation. Borrowers who didn’t receive Pell Grants could have up to $10,000 of debt canceled.
The White House said debt cancellation will apply only to borrowers earning less than $125,000 annually.
“Nearly 90% of relief dollars will go to those earning less than $75,000 a year and no one in the top 5% of incomes in America will get a single dollar of relief,” an administration official said.
The White House is also proposing significant changes to income-based repayment plans offered by the federal government, including a lower payment cap, making it easier to achieve full forgiveness and preventing balances from growing as long as a borrower makes payments, which…