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Biden to cancel up to $10K in federal student loan debt for certain borrowers and up to $20K for Pell Grant recipients - Dailyforextrading

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Biden to cancel up to $10K in federal student loan debt for certain borrowers and up to $20K for Pell Grant recipients - Dailyforextrading

President Joe Biden announced Wednesday that he will cancel $10,000 in federal student loans for millions of borrowers, following through on a campaign promise to address the burden of student debt.

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Borrowers who earn less than $125,000 a year, or $250,000 for couples who file taxes jointly, will be eligible for debt cancellation.

Pell Grant recipients, who make up the majority of student loan borrowers, will be eligible for an additional $10,000 in debt relief, for a total of $20,000.

Biden is also extending the pause on federal student loan payments for a final time through Dec. 31. It had previously been scheduled to expire Aug. 31.

Speaking at the White House, Biden described how the cost of higher education has grown significantly over the past few decades.

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“An entire generation is now saddled with unsustainable debt in exchange for an attempt, at least, at a college degree,” Biden said. “The burden is so heavy that even if you graduate, you may not have access to a middle-class life that a college degree once provided.”

Borrowers can qualify for debt forgiveness based on their incomes in either the 2020 or the 2021 tax year. To receive relief, most qualified borrowers will need to fill out an application with the Education Department, which said it will make the forms available in the coming weeks.

The debt forgiveness applies to undergraduate, graduate and Parent Plus loans. Current students can also qualify, but students who were claimed as dependents will be eligible based on their parents’ income, rather than their own.

Democrats and student debt relief advocates have pressured Biden for months to use his presidential authority to cancel student debt.

Ahead of the announcement, he had come under criticism for waiting until just days before the Aug. 31 deadline to announce an extension of the loan payment moratorium, leaving millions of borrowers unclear about whether they would have to start making payments for the first time in more than two years.

Biden on Wednesday also announced a new income-driven repayment plan that would cap monthly payments for undergraduate loans at 5% of a borrower’s discretionary income, down from the rate of 10% under most existing plans.


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The White House said that 43 million student loan borrowers will benefit and that as many as 20 million borrowers will have their full remaining student loan balances wiped out. Source: NBC

 

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