Biden to Cancel $10,000 in Student Loan Debt for Borrowers Earning Less Than $125,000

President Biden announced on Wednesday that he would cancel $10,000 in student loan debt for Americans earning less than $125,000 per year

Mr. Biden also extended a pandemic-era pause on loan payments until the end of the year. It has been in effect since March 2020.

Mr. Biden also said those with undergraduate loans would be able to cap their payments at 5 percent of their monthly income, a change that could significantly reduce bills for millions of borrowers.

The government’s current income-driven plans generally cap payments at 10 percent of a borrower’s discretionary income.

Across the United States, 45 million people owe $1.6 trillion for federal loans taken out for college — more than they owe on car loans, credit cards or any consumer debt other than mortgages.

The White House sought to address those economic concerns by targeting relief, which will be available only to borrowers earning less than $125,000 a year or households earning less than $250,000

Students who received Pell grants, which are for low-income students, will be eligible for an additional $10,000 in debt forgiveness.