U.S. President Joe Biden is set to cancel $10,000 of student debt for millions of Americans and as much as $20,000 for low and middle income groups who have received a Pell grant in the past, according to media reports. The loans will be given to those who earn under $125,000 per year, or whose families earn under $250,000 per year. The Biden Administration is also expected to extend the moratorium on monthly payments and interest once again, until the end of this year.
President Biden has faced pressure to extend the payment pause until at least the end of 2022, as well as allow meaningful student debt cancellation from lawmakers, who stated in a letter earlier this year: "Given the fast-approaching deadline for borrowers to resume payments, your administration must act as quickly as possible to extend the pause and make clear to the American public your intention to cancel a meaningful amount of student debt," the letter reads. "Canceling student debt is one of the most powerful ways to address racial and economic equity issues," the lawmakers led by Sen. Elizabeth Warren (D-Mass.) and Majority Leader Chuck Schumer argued.
According to the Federal Reserve, the level of outstanding student debt in the United States reached $1.75 trillion by the end of 2021. As the following chart shows, the student debt burden has more than tripled over the past 15 years, which is one of the reasons for the calls for student debt relief to grow louder and more frequent. Student loans are the second largest category of household debt in the U.S., trailing housing debt by a wide margin. Auto loans are the third largest category, currently standing at $1.3 trillion.
It is worth noting here that Biden’s cancellation will only affect federal loans, whereas the chart shows all student loans.