What Joe Biden's New Student Loan Plan Might Mean For You

The costs of attending college and university have skyrocketed in recent years. The average student in America now has more than $40,000 in student debt, and in 2021 the total outstanding student loan debt in the country added up to a whopping $1.75 trillion (per Investopedia). That staggering number grew from an already-shocking $1.57 trillion in 2019, to $1.7 trillion in 2020.

Investopedia reports that about 43% of university and college students incur debt to pay for their higher education. Approximately 18% of those borrowers are delinquent on their student loan payments.

If you're part of the group of graduates struggling to keep up with the monthly bills, then the August 24 announcement from Joe Biden is cause for celebration. Biden has been in the news lately for all the right reasons — an impressively successful legislative week which resulted in the passing of the Inflation Reduction Act helped boost his approval rating, and the raid at former president Donald Trump's Mar-a-Lago home (and the discovery of 300 classified documents on the premises) meant good news for the commander-in-chief. Now, Biden's latest move — which has fulfilled a vital campaign promise — is providing some much needed relief for student debt holders. 

Joe Biden announced that anyone with outstanding federal student loans who earns under $125,000 a year (or is part of a married couple bringing in under $250,000) will have $10,000 forgiven, according to The Washington Post. "I made a commitment that we would provide student debt relief, and I'm honoring that commitment today," Biden said from the White House.

Additionally, anyone with a Pell Grant — which is a federal subsidy available only to low-income students — can have $20,000 forgiven. "Targeting twice as much relief to Pell recipients helps close the racial wealth gap," explained Democratic senator Elizabeth Warren (per The New York Times).

Biden provided more information in a tweet: "We're extending the student loan payment pause a final time, targeting relief for folks that need it, and fixing the loan system and Public Service Loan Forgiveness," he wrote. His legislative win was met with messages of thanks, with one commenter writing on Instagram, "Thank you so much Mr. President," to another's, "Thank you !! This is life changing." Others had questions as to the application of debt relief, and still more stated that the amount forgiven was simply not enough. 

Further details about the Biden-Harris Administration's Student Debt Relief Plan — such as continuing to pause federal student loan repayments, and capping future student loan payments at 5% of a borrower's discretionary income — are available at the Federal Student Aid website.