August 24, 2022
Millions of Americans would see their student-debt load lightened by $10,000 each under a plan unveiled by President Biden on Wednesday, ending months of speculation about whether and how he would keep a campaign promise to help borrowers. The president also extended the pandemic-era pause on federal student-loan repayments for the last time, saying they would resume in January instead of in September.
The long-awaited plan for student-loan forgiveness would be restricted to individuals earning under $125,000 per year and families earning under $250,000 per year. Most borrowers within the income limit would be eligible to have up to $10,000 in loans forgiven; Pell Grant recipients could see up to $20,000 in federal student debt canceled.
“All this means people can start to finally crawl out from under that mountain of debt, to get on top of their rent and their utilities, to finally think about buying a home or starting a family or starting a business,” Biden said in remarks at the White House. “An entire generation is now saddled with unsustainable debt in exchange for an attempt at least at a college degree. The burden is so heavy that even if you graduate, you may not have access to the middle-class life that the college degree once provided.” Biden also said he would continue to fight to double the maximum Pell Grant.
Among the student-loan borrowers who had been eagerly waiting for the announcement was Lujain Al-Khawi, 25, who lives near Washington, D.C. Al-Khawi received a merit scholarship to study engineering at George Washington University and worked 20 to 30 hours a week throughout her college years but still had to take out $50,000 in public and private loans to cover her expenses. She expects the loan-forgiveness plan will wipe out the $6,000 in public loans she has remaining, although she still owes money on her private loans and is now borrowing more to cover the cost of a master’s degree at the Johns Hopkins University, which she is earning while working full time as an algorithm engineer at a medical-device company.
“I took out this public loan in 2015; it’s been almost seven years. Even though I have worked while studying, I couldn’t pay it off because of living expenses,” Al-Khawi said. “I’m very excited about the news today.”