More than 40 million Americans could see a partial or total reduction in their student loans thanks to a forgiveness plan announced by President Joe Biden on Wednesday, a historic but politically divisive event in an election year.
Fulfilling a campaign promise, Biden said $10,000 will be subtracted from federal student loans for those earning less than $125,000 a year or households earning less than $250,000. In addition, an additional 10,000 will be canceled for those who received Pell Grants to attend college.
It’s seen as an unprecedented attempt to stem America’s mounting student debt, but it doesn’t address the larger problem: the high cost of college.
Republicans said the plan is an insult to Americans who have paid off their debt and those who did not attend college. Critics from across the political spectrum have also questioned whether Biden has authority over the measure, and appeals are expected.
Biden also extended a pause on loan payments, which was scheduled to last until the end of the year.
“These two actions are for the families who need it most: the working and middle class people who have been hit especially hard during the pandemic,” Biden said at the White House on Wednesday.
Under the plan, 43 million borrowers will be eligible for some debt forgiveness and up to 20 million could have their debt erased entirely, according to the administration. Some 60% of borrowers are recipients of Pell Grants, which are reserved for college students with the most significant financial need, meaning more than half can get $20,000 in aid.
Sabrina Cartan, a 29-year-old media strategist from New York City, hopes her federal debt will be wiped out entirely. When she checked her balance on Wednesday, it was $9,940.
“I know there are people who feel like this isn’t enough, and that’s true for a lot of people,” said Cartan, who has already paid off about $10,000 of her loans. “I can say that for me personally and for a lot of people, that’s a lot of money.”