Joe Biden unveils $10,000 student loan forgiveness plan

President extends pause on repayments for four months

The cost of higher education in the US can range between $10,000 and $70,000 a year. Reuters

US President Joe Biden on Wednesday announced a long-awaited package of student debt relief, forgiving $10,000 for borrowers who earn less than $125,000 per year and forgiving $20,000 for Pell Grant recipients.

In remarks from the White House, Mr Biden said that his actions will "provide more breathing room for people so they are less burdened by student debt".

He added that 43 million people in the US will benefit from having their student debt decreased or fully cancelled as a result of his administration's actions.

The president announced that he will also extend the moratorium on repaying student loan debt for four months through December 31. This would be the final pause that Mr Biden backs, the White House said.

It is the seventh extension of the freeze since the Covid-19 pandemic began in March 2020 and would take the pause beyond the November midterm elections, in which Democrats are hoping to stave off a loss of their slim House and Senate majorities.

The latest pause in loan repayments is set to expire on August 31. Support from young voters could help boost Democrats’ showing.

The cost of higher education in the US can range between $10,000 and $70,000 a year — and sometimes more — leaving graduates with crushing debt as they enter the workforce. Government estimates show that the average debt for US college students when they graduate is $25,000, a sum many spend years or even decades paying back.

Republicans are in opposition to the action, arguing it is unfair to people who have spent years paying off their own student debts.

"I will never apologise for helping Americans, working Americans in the middle class," Mr Biden said in response to criticism.

More than 45 million borrowers in the US owe a collective $1.6 trillion in student debt, the White House said.

Agencies contributed to this report