President Joe Biden said on Aug. 24 that his administration will spend hundreds of billions of dollars to pay off $10,000 in federal student loan debt for some borrowers, amid widespread concern that the move will worsen the inflation crisis.
Individuals earning less than $125,000 a year or families earning less than $250,000 will be eligible for up to $10,000 in debt cancellation, the Education Department said. Pell Grant recipients who meet those income standards will be eligible for relief of up to $20,000; those grants are typically awarded to students from low-income households to help them cover their college expenses.
Nearly 8 million borrowers may be eligible to receive relief automatically because the department already has their relevant income information, Biden said while speaking at the White House.
In addition, a freeze on student loan repayments and interest that has been in place since March 2020 will be extended for a final time to the end of this year.
“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,” Biden wrote on Twitter.
Education Secretary Miguel Cardona echoed the president’s remarks, saying that the student loan debt cancellation would help alleviate the financial burden that has hindered college-educated Americans from achieving their life goals.
“We’re delivering targeted relief that will help ensure borrowers are not placed in a worse position financially because of the pandemic, and restore trust in a system that should be creating opportunity, not a debt trap,” he said.
The Aug. 24 announcement follows months of pressure from a vocal, progressive wing of Democrats who have called on Biden to fulfill his campaign promise. While Democrats insist that the cancellation will support Americans who struggle financially, Republicans question whether it actually helps those most in need.
By Bill Pan
