Biden to Cancel $10,000 in Student Loan Debt for Borrowers Earning Less Than $125,000

The debt forgiveness comes after months of deliberations in the White  House over fairness and fears that the plan could exacerbate inflation  before the midterms.

WASHINGTON — President Biden announced on Wednesday that he would cancel  $10,000 in student loan debt for Americans earning less than $125,000  per year, capping months of anticipation over a campaign promise to  provide economic relief to millions of people, according to four people  familiar with the announcement.

Mr. Biden also extended a pandemic-era pause on loan payments until the end of the year. It has been in effect since March 2020.

Mr. Biden also said those with undergraduate loans would be able to cap  their payments at 5 percent of their monthly income, a change that could  significantly reduce bills for millions of borrowers. The government’s  current income-driven plans generally cap payments at 10 percent of a  borrower’s discretionary income.

The debt forgiveness, although far less than the amount that some  Democrats had been pushing for, comes after months of deliberations in  the White House over fairness and fears that it could exacerbate  inflation before the midterm elections. The plan will almost certainly  face legal challenges, making the timing of any relief uncertain.

Across the United States, 45 million  people owe $1.6 trillion for federal loans taken out for college — more  than they owe on car loans, credit cards or any consumer debt other than  mortgages.