Biden cancels $10,000 in federal student loan debt for most borrowers

President Joe Biden announced Wednesday that he will forgive $10,000 in federal student debt for most borrowers, fulfilling a campaign pledge and delivering financial relief to millions of Americans.

Biden will cancel up to $20,000 for recipients of Pell Grants, he also said in a tweet Wednesday.

The relief will be limited to Americans earning under $125,000 per year, or $250,000 for married couples or heads of households. The relief is also capped at the amount of a borrower’s outstanding eligible debt, per the Education Department.

The president will also extend the payment pause on most federal student loans “one final time” through Dec. 31, 2022, according to the tweet.

At least 9 million borrowers could have their balances entirely cleared by Biden’s plan, according to higher education expert Mark Kantrowitz.

Biden’s decision to move ahead with $10,000 in student debt cancellation for borrowers who earn under $125,000 will cost the federal government around $244 billion, Kantrowitz estimated. The $20,000 in relief for Pell Grant recipients may add around $120 billion to the government’s costs.

The unprecedented action by the White House of wiping out hundreds of billions of dollars in consumer debt follows years of advocacy pressure and recent months of heated debate among Biden administration officials.

Those discussions centered on how student loan forgiveness might impact the high inflation hitting Americans’ wallets, the amount of student debt that should be canceled and if the president even had the power to reduce people’s balances without the legislative branch. 

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Looming November midterm elections added pressure on the administration to arrive at a decision. Advocates have said that forgiving student debt will galvanize younger voters, among whom Biden has been losing popularity, to the polls.

Although the president had been pushed to cancel $50,000 or more per person, including by Senate Majority Leader Chuck Schumer, D-N.Y., and groups such as the NAACP, he had repeatedly expressed reluctance to wipe out that much debt for all borrowers.