Biden is canceling up to $10K in student loans, $20K for Pell Grant recipients
President Biden unveiled a broad initiative on Wednesday to cancel up to $20,000 in federal student loan debt for recipients of Pell Grants and up to $10,000 for other qualified borrowers. Additionally, Biden prolonged the federal student loan payment suspension until December 31.
As promised during the campaign, Biden said in a tweet on Wednesday, "My Administration is releasing a proposal to allow working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023."
"Today, we're delivering targeted relief that will help ensure borrowers are not placed in a worse financial position as a result of the pandemic, and restore trust in a system that should be creating opportunity, not a debt trap," said Miguel Cardona, the U.S. Secretary of Education, in a statement.
Individual borrowers must make less than $125,000 annually, or less than $250,000 annually for couples, to be eligible for the $10,000 forgiveness.
Borrowers must meet these income limits and be Pell Grant recipients in order to be eligible for the $20,000 forgiveness. Low-income students can use Pell Grants to assist cover the cost of higher education.
According to the Department of Education, roughly 90% of the funds allocated for debt relief will go to borrowers who are no longer enrolled in school and make less than $75,000.
According to a senior administration official, about 43 million borrowers will profit from the plan, and 20 million will have all of their debt forgiven.
More than 60% of people who are currently repaying federal student loans also got Pell Grants, according to the White House.
The majority of borrowers will need to submit an application to verify their income in order to take advantage of this offer.
According to the Education Department, nearly 8 million debtors who have income data on file should be eligible to have their loans immediately forgiven. In the coming weeks, the agency will provide more information on how borrowers can apply for this relief.
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