On Wednesday, President Joe Biden announced that he would cancel $10,000 in student-loan debt for Americans earning $125,000 or less per year and extend a pause on payments for all borrowers until December 31. (Pell Grant recipients will receive an additional $10,000 in debt forgiveness.) According to the administration, 90% of the relief is being allocated to households earning $75,000 a year or less.
President Joe Biden’s plan to provide debt relief is less comprehensive than that of some other Democrats, including Senators Bernie Sanders and Elizabeth Warren, who ran on similar plans in the past. Some borrowers may find themselves owing thousands of dollars once this new measure takes effect.
Some figures still on the left, including California congressman Tony Cárdenas (who has been vocal about his desire to see more progressive policies), see a glimpse of hope in this new program. “That’s a lot of young people that are going to be able to have a sigh of relief,” Cárdenas told The New York Times. “They’ll be able to look forward to buying a house soon; they could look forward to starting a family sooner.”
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“All of this means people can finally start to climb out from under that mountain of debt,” President Biden said in remarks from the White House. “To finally think about buying a home or starting a family or starting a business. And by the way, when this happens, the whole economy is better off.”
President Joe Biden also announced that a pause in student loan payments, which was put into place at the height of the 2020 COVID-19 pandemic, would expire at the end of the year. The Department of Education said it would set up an application process by the end of December.
More than half of all Americans have student loan debt, amounting to more than $1.6 trillion in outstanding loans—more than they owe on car loans or credit cards.
The White House is offering $20,000 in debt relief to students who have received Pell grants. About 60% of borrowers have received Pell grants, and the majority come from families making less than $30,000 a year. The Education Department estimates that 27 million borrowers will qualify for up to $20,000 in relief.
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Sources: The New York Times, Vogue
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