On Wednesday, President Joe Biden made the long-awaited decision to cancel student loans. He presented his plan from the White House podium, which forgives up to $20,000 of student loan debt for Pell Grant recipients and up to $10,000 of student loan debt for borrowers with incomes under $125,000.
Biden’s latest proposal would offer relief to 43 million borrowers, with nearly half of them having all of their debt forgiven.
The future president’s father’s own battle to pay for the future president’s higher education expenditures influenced Biden’s choice to provide the help, he said in his opening statement at the White House on Wednesday. Here is a summary of Biden’s proposal, which he would carry out by executive order but which could be challenged in court by Republicans and other conservative organizations who favor doing nothing to address the student debt crisis.
• If you attended college and made less than $125,000 (or $250,000 for a married couple) in 2020 or 2021, $10,000 of your loan will be forgiven.
• If you attended college, got Pell Grants (a type of federal financial help for undergraduate students), and met the required income level, your debt of $20,000 would be forgiven.
• The suspension of student loan payments has been extended through December 31, 2022, preventing borrowers from having to start paying again in September.
The maximum cancellation amount is equal to the balance of your outstanding debt. Biden’s action follows years of advocacy from borrowers, lawmakers, and activists who have highlighted how rising college costs—which have more than tripled since 1980, even after adjusting for inflation—and stagnant federal aid levels have compelled students to take on onerous loans, leaving many middle- and low-income families insolvent and preventing them from starting businesses, purchasing homes, or retiring.
Biden’s proposal was attacked by progressive Democrats since it did not call for a widespread cancellation.