One week before student loan payments were set to resume after the pandemic pause, President Joe Biden cancelled student debt for millions of Americans. Biden also plans to extend the payment pause for another four months. The debt cancellation only applies to graduates who make under $125,000 a year or households who make less than $250,000 a year. Graduates who applied for the Pell Grant can now have up to $20,000 in loans forgiven, and other loan recipients can be forgiven for up to $10,000. 

Almost 43 million Americans will be able to reap the benefits, and approximately 20 million Americans may have their debts completely waived (Axios News). The Biden administration is also looking to reform the loan system to make it easier for future students and borrowers. Monthly debt payments will now be a maximum of 5% of the borrower’s monthly income.

“All this means [is that] people can start to finally crawl out from under that mountain of debt, to get on top of their rent and utilities, to finally think about buying a home, or starting a family or starting a business, Biden said. “My plan is responsible and fair. It focuses the benefit on middle class and working families. It helps both current and future borrowers, and it’ll fix a badly broken system,” Biden added. 

The cancellation was notably announced just two months before the midterm election. Democrats are trying to get things done to encourage young voters to cast a ballot this year. By delivering on campaign promises and fulfilling the wishes of many young voters, the Biden administration may have secured votes for November.

Nearly 8 million Americans will qualify automatically due to the Department of Education having access to their financial data. However, many former students may still need to apply. “We should worry about people who are not in touch with the federal government who could fall through the cracks,” Bryce McKibben, former policy advisor to Sen. Patty Murray, said on the Senate Health, Education, Labor, and Pensions Committee. “Folks who are really at risk of struggling with their student debt are also going to be the most at risk of not being able to fulfill the paperwork requirements,” McKibben said. 

While the program for applications is allegedly coming in the next few weeks, many borrowers are questioning whether they qualify. The best people can do now is check their income threshold from 2020 and 2021 tax records and find out if you had received a Pell Grant. Financial aid information and previous loans can be found by logging into your Free Application for Federal Student Aid (FASFA) account. 

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