Inside Higher Ed
August 24, 2022
President Biden announced today that he will cancel up to $10,000 in student debt for Americans earning less than $125,000 per year (or $250,000 for couples filing taxes jointly) with additional relief for borrowers from low-income backgrounds who received Pell Grants. He will also extend the current pause on student loan payments, slated to end Sept. 1, for an additional four months, through Dec. 31.
“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 said on Twitter.
Further details are expected later this afternoon.
The announcement marks an unprecedented act of executive authority and will be the first broad-based debt cancellation effort in history. It comes after months of deliberation from the administration amid cancellation’s possible implications for the upcoming midterm elections in November, and fears that it could worsen inflation. Officials from the White House said in a call with reporters today that they believe that debt relief would have a neutral impact on inflation, since borrowers have not been obligated to make payments on their loans since the Trump-era payment pause began in March 2020.
Federal loans awarded before July 1, 2022, including graduate and Parent PLUS loans, will be eligible for forgiveness. Students included as dependents are eligible if their parents’ household income is under $250,000.
“Earning a college degree or certificate should give every person in America a leg up in securing a bright future. But for too many people, student loan debt has hindered their ability to achieve their dreams—including buying a home, starting a business, or providing for their family. Getting an education should set us free; not strap us down! That’s why, since Day One, the Biden-Harris administration has worked to fix broken federal student aid programs and deliver unprecedented relief to borrowers,” Education Secretary Miguel Cardona said in a statement.