President Joe Biden announced Wednesday that his administration will cancel $10,000 in student loan debt for federal borrowers and $20,000 for Pell Grant recipients earning less than $125,000 a year.
The long-anticipated announcement comes one week before the pandemic pause on student loan payments is scheduled to end. Biden is extending that pause through the end of the year, which will help all borrowers, not just those eligible for the debt forgiveness, but the administration is warning this is the final extension and borrowers should plan to resume payments in January.
The debt forgiveness is capped at $20,000 for Pell Grant recipients and $10,000 for the other 40 percent of federal borrowers. To qualify, individuals must have earned less than $125,000 and households less than $250,000 in either the 2020 or 2021 tax years, according to senior administration officials who described the details of the plan in a background call with reporters.
