President Biden on Wednesday unveiled a plan to cancel $10,000 in student loan debt for borrowers who earn less than $125,000 per year. The plan would also extend the pause on student loan payments for borrowers until Dec. 31.
Senior administration officials detailed the President’s plan in a background call to reporters prior to his announcement. Officials said Biden also plans to cancel an additional $10,000 of student loan debt for borrowers who received Pell grants in college, targeting relief to borrowers from lower-income backgrounds.
The President confirmed all of the details of the plan during a speech on Wednesday officially announcing the debt forgiveness. In his remarks, Biden touted that his administration will “provide more breathing room for people so they’re less burdened by student debt.” The President said that borrowers can expect the Education Department to send out a short form to apply for the debt relief.
In a background call to reporters on Wednesday, senior administration officials also clarified that eligibility for student loan relief can be based on either the 2020 or 2021 tax year. Parent PLUS loans, which are federal loans taken out by parents of dependent undergraduate students to help pay for tuition, are also included in the administration’s plan for student debt cancelation.
Senior administration officials said the Education Department is set to also reform the current income driven repayment system, which officials deem as “too complex and too limited.” The proposed rule, officials said, would lower monthly payments from the current 10% cap repayment of monthly income to 5%, and would forgive borrowers of debt after 10 years of payments instead of the current 20 years.
The administration’s targeted cancelation of student debt comes after four extensions on a pandemic-era moratorium on federal student loan payments during Biden’s presidency, which was first implemented under the Trump administration.
On the campaign trail, Biden voiced his support for forgiving at least $10,000 of federal student loan debt.
Progressives have urged the President to go further by canceling federal student debt entirely. Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) have demanded Biden to forgive at least $50,000 in debt for all borrowers.
Schumer and Warren, however, appeared to praise the news of Biden’s plan for student loan debt cancelation in a statement issued Wednesday.
“With the flick of a pen, President Biden has taken a giant step forward in addressing the student debt crisis by cancelling significant amounts of student debt for millions of borrowers,” Schumer and Warren said. “The positive impacts of this move will be felt by families across the country, particularly in minority communities, and is the single most effective action that the President can take on his own to help working families and the economy.”