President Joe Biden intends to announce a student and pell grant debt relief program for millions of Americans.
According to the people familiar with the matter, the announcement is set to be made on Wednesday. As per the details, Joe Biden intends to cancel $10,000 of student debt and $20,000 of debt for low and middle-income citizens. The $20,000 debt relief is applicable only to borrowers who have previously obtained a Pell grant.
The debt relief plan is a part of a more expansive announcement to be made on Wednesday.
Joe Biden’s debt relief is for citizens under $125,000 in earnings per year
The debt relief plans by the White House will be applicable only to American citizens who come under the yearly earning bracket of $125,000. According to people familiar with the matter, for married couples who file taxes jointly, the income bracket will be $250,000.
In addition to the debt relief, President Biden will also freeze student-loan repayments for four months. Such a student-loan pause was first brought under the Trump administration. The pause period will be extended until December 31.
According to the sources, the pause would be the final one that would be backed by Joe Biden. As per the reports, some 43 million federal student loan holders would be qualified for some kind of forgiveness, including 20 million who might have their debt entirely canceled.
It arrives before the midterm elections for Congress and could help the Democrats with a boost in votes.
The Education Department is already working on a proposal to develop a more flexible income-driven repayment scheme, which the White House will also promote. The plan is expected to reduce borrowers of undergraduate student loans’ monthly payments by half.
According to earlier projections, it would cost the federal government about $230 billion to erase each borrower’s $10,000 in student debt, but the bigger amount for Pell Grant recipients will make that cost higher.