President Biden officially announced on Wednesday that his administration is forgiving up to $10,000 in student loan debt for borrowers making less than $125,000 annually and $20,000 for Pell Grant recipients, marking the largest forgiveness of federal student loans per individual to date.
Biden also again extended a payment freeze on federal student loans and interest accrual, butting right up against an Aug. 31 deadline that would have kicked bills back into effect just before November’s midterm elections.
The payment pause is now in effect until Dec. 31.
The Hill reported on Tuesday that the White House would announce a plan to cancel a chunk of student loan debt and an extension of the existing pause, citing multiple sources. The announcement comes within the smallest window of time borrowers have had to determine when their payments would resume, which has aggravated advocates for leaving borrowers in limbo.
Loan payments were first put on hold in March 2020 under former President Trump, and the freeze has since been extended six times. Trump’s order froze the accrual of interest on federal student loans, effectively putting on hold $1.6 trillion in debt owed by more than 40 million Americans.
While the cancelation will be celebrated as the most far-reaching move to help student loan borrowers, activists and some Democrats will also likely call for more in student loan forgiveness, like forgiving up to $50,000 per borrower, or overhauling federal loan programs.
The White House has faced fierce pushback at the idea of means-testing to decide which borrowers are granted student loan forgiveness after reports had surfaced that it would limit relief to people earning below $125,000.
Biden had kept his next move on student loans payments, including whether to forgive any amount of debt, largely under wraps though he told reporters last month that “the end of August” was his timeline for making a decision.
Education Secretary Miguel Cardona said on Sunday that a decision on the matter would come within the week.
The Education Department had said that borrowers will be communicated to “directly” about the end of the freeze, following reporting last month that student loan servicing contractors have been told to not send upcoming billing statements.
Biden has been under pressure from Democrats and advocates to extend the freeze, as well as act on student loans forgiveness.
Last month, Sen. Bob Menendez (D-N.J.) led a letter signed by over 100 Democrats in Congress calling for Biden to extend the pause, citing the economic hardship some have faced due to the coronavirus pandemic, as well as the squeeze rising inflation has put on consumers nationwide.
In May, Senate Majority Leader Charles Schumer (D-N.Y.), Sen. Elizabeth Warren (D-Mass.) and Sen. Raphael Warnock (D-Ga.) met with Biden to push for forgiveness. Advocates and other Democrats, including Schumer, have pressed for forgiveness of $50,000 per borrower or to cancel debt entirely.
Biden announced in June that he would cancel billions in student debt for former Corinthian College students, which raised pressure on the White House to offer more extensive relief.
During 2020 campaign, Biden supported forgiving at least $10,000 in federal student loans per person. Over a year ago, he requested a memo from the Department of Education to determine his authority to forgive student debt through executive action. Since then, the administration has not publicly announced if the memo is complete.