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Biden Student Debt Plan: What You Need to Know

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Biden's Student Debt Plan: What You Need to Know

The long-awaited plan for student

 (CTN News)- Debt plan forgiveness from President Biden has finally been announced after almost a year of deliberation and anxiety from borrowers. According to the Washington Post, his plan will forgive up to $10,000 of federal student-loan debt and up to $20,000 for low- and middle-income borrowers who previously received Pell Grants.

This fulfills a campaign promise and allows over 40 million Americans to receive a student loan forgiveness. In a tweet posted on Wednesday, Biden announced that his administration would offer working and middle-class families breathing room as they prepare to resume federal student loan payments.

Biden had expressed hesitation to extend debt relief to students.

In past discussions about loan forgiveness, who attended elite universities, and the income caveats to his current loan-forgiveness plan reflect the White House’s desire to focus relief on those with increased need: Only people with incomes under $125,000 will get forgiveness, or married couples who file jointly.

According to the Post, 90 percent of the relief will go to borrowers making less than $75,000, and 20 million Americans could get their debts completely forgiven.

Students with undergraduate loans can cap their repayment at 5 percent of their income under the debt plan (the government’s current repayment cap is 10 percent of discretionary income), and student loan payments are paused until 2022 for a final time. Those who didn’t finish their degrees will not be disqualified, and private loans won’t be forgiven.

45 million Americans owe $1.6 trillion in college loans.

Many progressive groups and Democrats called for more substantial reform before Biden’s announcement, arguing that $50,000 in forgiveness would narrow the racial wealth gap for BIPOC borrowers, who are disproportionately affected by student debt.

Republicans and centrist Democrats fought debt forgiveness, saying it would increase the federal deficit and inflation and unfairly penalize people who already paid off their loans. Others consider the debt plan a drop in the bucket.

“While this announcement is a huge win for many, it is important to stress that $10,000 will leave many others still crushed by debt, and important details will determine who gets the most help,” Natalia Abrams, founder and president of Student Debt Crisis Center, told NBC News Wednesday.

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