Us president joe biden law h r 5376 the inflation reduction act of 2022
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President Joe Biden To Cancel Up To $20K in Student Loan Debt

President Joe Biden has announced a student loan forgiveness plan, cancelling up to $10K in federal student loans for millions of borrowers.

President Joe Biden is readying Americans for a new student loan forgiveness plan. On Wednesday (August 24), Biden announced that he will cancel up $10,000 in student debt for Americans making less than $125,000 yearly, or $250,000 annually if they are part of a household. For Pell Grant recipients, up to $20,000 of their student loan debt will be canceled. According to the U.S. Department of Treasury, the national debt currently sits at $30.7 trillion.

Biden also stated that borrowers with undergraduate student loans would be able to "cap repayment at 5% of your monthly income." Although student loan repayments were set to end on August 31, Biden has extended the payment pause, which will last for "one final time through Dec. 31, 2022."

"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.

On Wednesday, The Department of Education said that the application for loan cancellation will become available "no later than when the pause on federal student loan repayments terminates at the end of the year."

Although some have criticized the student loan cancellation, claiming that it will have a negative impact on inflation, Biden's administration has pushed back.

“The combination of restarting those loan payments and providing targeted debt relief, per the president’s plan, at roughly the same time, will largely offset each other. That’s our view,” an official said.

The President will hold a press conference at 2:15 ET on Wednesday to formally announce the student loan relief plan.