Biden to cancel up to $10K in student loan debt for borrowers making under $125K President Biden announced a sweeping effort to forgive up to $20,000 of federal student loan debt for Pell Grant recipients, and up to $10,000 for other borrowers making under $125,000 a year.

Biden is canceling up to $10K in student loans, $20K for Pell Grant recipients

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After months of speculation, President Biden announced today a sweeping move to erase some federal student loan debt for up to 43 million people. The plan would offer $10,000 in debt cancellation to most borrowers and twice as much for lower-income folks.

For the details, we're joined by NPR education correspondent Cory Turner. Hey, Cory.


SHAPIRO: Walk us through the basics. How exactly would this plan work?

TURNER: Well, all borrowers who earn less than $125,000 a year can qualify for up to $10,000 in debt cancellation. Borrowers who received a Pell Grant to attend college, they can get up to $20,000 in cancellation. And overall, the White House says, up to 43 million borrowers could benefit. And of those, up to 20 million borrowers could have their debts completely erased.

My colleague Sequoia Carrillo spoke with one of those borrowers right after the announcement just a couple of hours ago. Trianna Downing has about $16,000 in federal loans and thinks she should qualify for the $10,000 in cancellation.

TRIANNA DOWNING: I'm very, very, very grateful because this is, like, obviously a big help to me personally. So - oh.

TURNER: Downing said her big question now, Ari, is when will she get that help?

SHAPIRO: And do you have an answer to that question? Do you know when and whether borrowers are going to need to do anything specific to get it?

TURNER: Well, it's a little complicated. It's a bit of a hitch. Because of the means testing, most borrowers are likely going to need to submit some kind of basic application that verifies their income and that they qualify for this relief. According to the White House, only about 8 million borrowers already have that information on file. They are the lucky ones. They will likely have their debts erased automatically without having to do anything. The other 35 million borrowers or so will have to act to get the help.

SHAPIRO: There had been calls to cancel all student debt or to go up to $50,000. Obviously, this plan does not go that far. What's the reaction to that been?

TURNER: Well, one of the chief proponents of canceling more was Senator Elizabeth Warren. And in a statement, she said, quote, "today is a day of joy and relief." Another staunch proponent, Congresswoman Ayanna Pressley, tweeted that President Biden's action to cancel student debt is a victory for the movement and so many families. And, you know, I think this move also helps protect Biden at least a bit from criticism of earlier proposals that folks said focused too much help on borrowers who don't need it. Doubling the amount of cancellation for lower income borrowers was really a late pivot, Ari. And according to the White House, it means roughly 90% of this benefit will now be going to borrowers who earn less than $75,000 a year.

SHAPIRO: A big underlying issue here is just the cost of college. Is there anything in today's news that might address that?

TURNER: Yes and no. There is nothing that is going to drive down the cost of college - nothing - which Representative Virginia Foxx, the ranking Republican on the House Education Committee, pointed out in a pretty scathing statement to NPR, saying, quote, "taxpayers are forced to pay for a bill that they should not owe and colleges are allowed to continue raising tuition. This is wrong, unfair and irresponsible," she said. There's also been criticism from other Republicans and some Democrats who worry about this plan's effect on inflation and the economy.

But to your point, Ari, about the cost of college, I should say there are a few big changes here that should help future borrowers afford college. Biden proposed a new kind of income-driven repayment plan that would reduce monthly payments based on discretionary income. The plan would also forgive some remaining debts after 10 years instead of 20. And perhaps most importantly, it would cover unpaid monthly interest as long as the borrower is making payments. And that could be huge for borrowers who in the past have seen their balances balloon because of interest.

SHAPIRO: NPR's Cory Turner. Thank you.

TURNER: You're welcome.

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