In a long-awaited announcement, President Joe Biden said that his administration is canceling up to $10,000 in student debt for a large portion of the 45 million Americans burdened by student loans on Wednesday, after years of pressure from progressive activists.
The administration is canceling $10,000 in student debt for individuals making under $125,000 a year, or couples making under $250,000 a year. The cancellation will not be counted as taxable income, and likely includes debt incurred from graduate schooling.
Biden additionally announced that recipients of Pell Grants – funding for undergraduate students with low incomes – will be granted an additional $10,000 in debt forgiveness for a total of $20,000. The plan will allow those with undergraduate loans to cap payments at 5 percent of their monthly income.
The president also said he is extending the student loan payment pause “one final time” until December 31, past the midterm elections, allowing borrowers to hold off on paying their student loans for another four months. The payment pause was set to expire on August 31, or in one week.
“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 in a tweet on Wednesday morning.
Biden’s announcement came after nearly two years of pressure from student debt activists, who have been urging him to cancel student debt since before he took office.
The plan is far short of what activists have called for – debt advocates have urged Biden to cancel up to $50,000 or cancel all student loans with no income restrictions. As officials in the Education Department have said, placing an income cap on the plan makes it far harder for the government to administer the loan forgiveness and burdens the program with what advocates say are unnecessary hurdles for borrowers.
The Biden administration spent months deliberating over the plan. The administration has been sidetracked by debunked conservative arguments, including those saying that student debt forgiveness will only benefit the wealthiest Americans.
Not only a self-defeating argument – wealthy people largely don’t have student debt – but it has also been disproven by research showing that student debt cancellation is a progressive financial policy that will disproportionately help people with low incomes. Indeed, the administration says that 90 percent of the relief will go toward households with incomes of $75,000 a year or less.
Conservatives have also argued that the plan will carry a high cost, but advocates say that the supposed cost of the plan is moot. A large portion of the debt, especially for borrowers who have larger debt burdens, would never have been paid off.
Progressive lawmakers and debt activists celebrated the announcement. “Today is a day of joy and relief,” wrote Sen. Elizabeth Warren (D-Massachusetts). “President Biden is canceling up to $20,000 of federal student debt for as many as 43 million Americans – a powerful step to help rebuild the middle class. This will be transformative for the lives of working people all across this country.”
Activists pledged to keep fighting for more relief for the millions of Americans who owe more than $10,000 or $20,000 of student debt.
“This didn’t just happen folks. We organized. Now some 20M Americans should be getting student debt relief,” wrote Braxton Brewington, press secretary for the Debt Collective. “This is truly just the beginning – I promise you.”
“If we can cancel $10k we can cancel it all,” the Debt Collective added.
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