Biden announces some student loan debt forgiveness
WASHINGTON - President Joe Biden announced Wednesday that millions of Americans can have thousands of dollars in federal student loan debt forgiven.
Biden tweeted that his administration will forgive up to $10,000 in student loan debt for anyone who makes less than $125,000 a year. Those who went to college on Pell Grants are eligible to have $20,000 in loans forgiven.
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.
— President Biden (@POTUS) August 24, 2022
I'll have more details this afternoon. pic.twitter.com/kuZNqoMe4I
The student loan pause has been extended "one final time" to Dec. 31, 2022. Biden also said anyone with undergraduate loans can cap repayment at 5% of their monthly income.
"People can start finally crawling out from that mountain of debt," Biden said from the White House Wednesday afternoon.
Student loan debt has steadily trended upward with roughly 45 million Americans owing nearly $1.7 trillion dollars.
In Massachusetts, 12.8% of residents have student loan debt. The average student loan debt in the Commonwealth is $34,146.
Since Biden took office, Sen. Elizabeth Warren and Rep. Ayanna Pressley have pushed Biden to slash student loan debt. They introduced a resolution back in February 2021 urging the president to cancel up to $50,000 in federal student loan debt.
Warren issued a statement with Senate Majority Leader Chuck Schumer on 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," they 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."
Pressley tweeted after the announcement, "This is going to change and save lives."
An analysis by the Penn Wharton Budget Model estimates that the total cost of forgiving the student debt will cost almost $300 billion in the first year. It also estimated that the majority of the relief would help Americans who are in the top 60% of earners.