President Biden will forgive up to $20,000 in federal student loan debt for tens of millions of Americans, a move that will provide unprecedented relief for borrowers but is certain to draw political and legal challenges.
Following more than a year of internal debate, the president will announce later Wednesday that he will cancel $10,000 in federal student loan debt for borrowers making under $125,000 a year or couples making less than $250,000 a year, according to the White House. In addition, those who receive federal Pell Grants and make less than $125,000 a year would be eligible for total forgiveness of $20,000, the White House said. Independent estimates suggest the plan will cost more than $300 billion over 10 years.
The forgiveness applies to students with federal loans from undergraduate and graduate programs, as well as Parent Plus loans, White House officials said. While debt forgiveness is often treated as income for tax purposes, the canceled student debt will be exempt, like some other federal student debt forgiveness programs.
Mr. Biden also announced an extension of the pandemic pause on student loan payments through the end of this year. Loan payments were set to resume for millions of borrowers after Aug. 31. The Education Department will release more details on how borrowers can claim relief in the coming weeks and will make an application available before the repayment pause expires at the end of the year. Around eight million borrowers could be eligible for automatic relief, the department said, because the department already has their income data.
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