President Joe Biden has stated that the United States government will forgive $10,000 in student loans for each borrower.
This was disclosed in a statement issued by the White House, titled “President Biden Announces Student Loan Relief for Borrowers Who Need It Most”
Many Democrats had sought for as much as $50,000 per borrower to be cleared, but they applauded the action nonetheless as the party prepares for the midterm elections in November.
In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023.
I'll have more details this afternoon. pic.twitter.com/kuZNqoMe4I
— President Biden (@POTUS) August 24, 2022
What the White House is saying
Speaking from the White House on Wednesday, Mr Biden said his plan would give more “breathing room” to working and middle-class families.
The White House said the country’s “skyrocketing cumulative federal student loan debt – $1.6 trillion and rising for more than 45 million borrowers – is a significant burden on America’s middle class.”
Biden’s administration will extend a COVID-19 pandemic-linked pause on student loan repayment through to the end of the year, while forgiving $10,000 in student debt for borrowers whose income falls below $125,000 a year, or $250,000 for a married couple, the White House said.
“To address the financial harms of the pandemic for low- and middle-income borrowers and avoid defaults as loan repayment restarts next year, the Department of Education will provide up to $20,000 in loan relief to borrowers with loans held by the Department of Education whose individual income is less than $125,000 ($250,000 for married couples) and who received a Pell Grant.
“Nearly every Pell Grant recipient came from a family that made less than $60,000 a year, and Pell Grant recipients typically experience more challenges repaying their debt than other borrowers. Borrowers who meet those income standards but did not receive a Pell Grant in college can receive up to $10,000 in loan relief.” the White House added.
What you should know
- U.S. consumers carry a massive $1.75 trillion in student loan debt, most of it held by the federal government, the result of university tuition fees substantially higher than in most other rich countries.
- The forgiveness could impact 8 million borrowers automatically, the Department of Education said, while others would need to apply for forgiveness.
- According to a New York Federal Reserve research, cutting $10,000 in federal debt for every student would equate to $321 billion in federal student loans and eliminate the whole burden for 11.8 million borrowers, or 31% of them.
- Borrower balances have been frozen since the start of the COVID-19 pandemic, and no payments on most federal student loans have been due since March 2020.
