President Biden announced today that his administration will forgive up to $10,000 in student loans. Pell Grant recipients can have up to $20,000 of their student loans forgiven. The announcement comes after months of pressure on President Biden to fulfill a campaign promise he made around student loan forgiveness leading up to the election.
The action will be done via executive order. Congressional Republicans were largely not on board with the student loan forgiveness platform. The order will also extend the pause on monthly payments through the end of the year meaning borrowers will not have to resume payments until January 2023.
Not everyone will benefit from the executive order. Individual borrowers earning over $125,000 per year or married couples making over $250,000 per year will not have their loans forgiven. However, the pause extension will apply to all borrowers.
The executive order also includes a provision for payments based around income.
The student loan crisis has been a huge source of contention. Estimates say there is around $1.75 trillion in student loan debt spread out over 43 million borrowers. Some borrowers owe more than others. There are some debtors who owe much more than the $10,000 being forgiven but there are also those, around 8 or 9 million that will have their debt completely wiped out by the executive order.
This debt relief will not be treated as taxable income according to the White House.
Read the full press release here. (White House)