Millions of Americans will see their student debt canceled or reduced following President Joe Biden's long-awaited announcement on student loan forgiveness Wednesday afternoon.
The Biden administration is forgiving up to $10,000 in federal student loans for those making less than $125,000 a year for individuals or $250,000 for married couples or heads of households and up to $20,000 for Pell Grant recipients who meet the income threshold. Private loan holders are not included in the plan.
"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," Biden tweeted, adding that he will share more details of the plan Wednesday afternoon.
Most borrowers would need to apply for the program online, according to StudentAid.gov, which noted that an application will become available "in the coming weeks." Nearly 8 million borrowers for whom the Department of Education has income information available, however, should be eligible to receive debt relief automatically.
In the same tweet, Biden announced that the pause on student loan repayment, interest and collections, which was set to expire on Aug. 31, will be extended "one final time" through Dec. 31. The department's repayment freeze, which was first enacted in March 2020, has been extended four times since Biden took office and is set to end Aug. 31.
More than 40 million Americans are saddled with student loan debt, an amount that has ballooned to more than $1.7 trillion. At least 12 million borrowers will see their debt to the federal government disappear as a result of the decision, which should also wipe out at least $321 billion in federal student loans, according to the Federal Reserve — however this estimation is from April 2022 and did not include the $20,000 cancellation for Pell Grant recipients, so those numbers could be higher.
The Biden administration has already canceled more student loan debt than any other administration in U.S. history, forgiving nearly $32 billion in loans, including $13 billion for defrauded borrowers.
More than half of Americans — 51% — support the $10,000-per-borrower plan, according to a recent survey of 1,500 Americans from An Economist/YouGov.
Biden has pledged to cancel at least $10,000 of student debt per borrower since his 2020 campaign for president. Still, some lawmakers and advocates have argued that $10,000 isn't enough, urging the government to cancel at least $50,000 per borrower instead.
While the diverse population of student debt holders includes people from different political parties, professions, ages and races, there are some people that fall deeper into student debt than others: women and people of color.
Women hold roughly two-thirds of all student debt in the United States, the American Association of University Women (AAUW) reports, while Black and African American college graduates owe an average of $25,000 more in student loan debt than white college graduates, according to the National Center for Education Statistics.
This is a developing story. Please check back for updates.