Up to tens of millions of debtors might benefit from Biden's anticipated announcement on student loan forgiveness, and as many as 14 million people could start over.
In Washington Following through on one of his major campaign promises, President Joe Biden's plan to forgive $10,000 in federal student loans for borrowers earning up to $125,000 per year will help tens of millions of borrowers.
Biden has come under fire from certain Democrats and debt relief supporters to act on loan cancellation before the midterm elections. Biden is also anticipated to prolong the federal student loan payment freeze through the end of the year.
Advocates for debt relief have applauded Biden's proposal, but others have expressed disappointment that it did not go far enough. The income cap, according to others, would make implementation more difficult. They encouraged the Biden administration to prolong the payment embargo even further so lenders would have more time to apply the new rule.
The amount of student loan debt in the US is depicted in the four charts below.
Student debt has ballooned
In the second quarter of 2022, borrowers held more than $1.5 trillion in combined student debt, according to the Federal Reserve. The second-largest consumer debt sector after mortgages is student loans.
Up to a third of borrowers could see their debts forgiven
More than 45 million people have federal student loans, with more than half having balances of under $20,000, according to data from the Education Department. The $10,000 forgiveness cap applies to around 14.6 million debtors, however, individuals who earn more than $125,000 yearly are not eligible.
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