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President Joe Biden and Education Secretary Miguel Cardona
President Biden finally made his announcement on student loan debt. Photo: Alex Wong/Getty Images.

Biden cancels $10,000 in Student Loan Debt for borrowers earning less than $125,000

President Biden cancels $10,000 in student debt for borrowers who earn less than $125,000 per year, and up to $20,000 of debt cancellation for Pell Grant.

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On Monday, Al Dia News reported The U.S Department of Education secretary Miguel Cardona had stated on Sunday, that President Biden will be making an announcement about student loans. 

Today, President Biden announced the long-awaited plan this afternoon; stating $10,000 in student debt for borrowers who earn less than $125,000 (individual borrowers)  and $250,000 for households per year will be forgiven, and up to $20,000 of debt cancellation for Pell Grant recipients. 

The President also extended the moratorium on repaying student-loan debt until December 31st, providing an additional four months to borrowers. This marks the seventh extension of the freeze since it was first announced due to Covid-19 pandemic in March 2020. 

For months borrowers have awaited to hear whether $10,000 would be forgiven per borrower, something advocates, progressive lawmakers, civil rights groups, and labor leaders’ have stressed the importance of the White House forgiving higher debt-loads, especially for Black or lower income students; who have been disproportionately devastated by student loan debt.

The NAACP has been critical of Biden’s reported plan to cancel $10,000 in student debt, which NAACP feels is not enough to make a meaningful difference among Black Americans, who “typically end up owing 6% more than they initially borrowed, while White borrowers owe 10% less,” as reported by CNN Business.

An estimated 72% of Latinos attending college ultimately take out loans of some kind, a June 2020 report from the Student Borrower Protection Center found. Bloomberg News states that “two out of every three Latino students have loan debt, according to an analysis by the Education Data Initiative, a research group; for four out of five of those borrowers, their debt one year after college exceeded $10,000.”

However, this will be the final extension of student loan repayment President Biden, Vice President Harris, and the U.S. Department of Education will be making. 

“Today, we’re delivering targeted relief that will help ensure borrowers are not placed in a worse position financially because of the pandemic, and restore trust in a system that should be creating opportunity, not a debt trap,” said U.S. Secretary of Education Miguel Cardona.

As reported by the Federal Student Aid, an office of the U.S. Department of Education, to ensure a smooth transition of repayment and prevent defaults an additional extension has been granted until December 31, 2022, with payments expected to resume January 2023. 

Also, “borrowers who are employed by nonprofits, the military, or federal, state, Tribal, or local government may be eligible to have all of their student loans forgiven through the Public Service Loan Forgiveness (PSLF) program,” reports the Federal Student Aid page.

To be notified when the process has officially opened, sign up at the Department of Education subscription page.

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This article is part of Broke in Philly, a collaborative reporting project among more than 20 news organizations, focused on economic mobility in Philadelphia. Read all of our reporting at brokeinphilly.org.
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