Student Loans: Biden Forgives an Additional $10K For Pell Grant Borrowers

Mandatory Credit: Photo by JIM LO SCALZO/EPA-EFE/Shutterstock (13096600j)US President Joe Biden speaks before signing the Inflation Reduction Act in the State Dining Room of the White House in Washington, DC, USA, 16 August 2022.
JIM LO SCALZO/EPA-EFE/Shutterstock / JIM LO SCALZO/EPA-EFE/Shutterstock

President Joe Biden has announced the much-awaited cancellation of some student loan debt. As part of the official White House announcement, he shared he is forgiving an additional $10,000 for borrowers who received Pell Grants.

The Department of Education explains on its website that federal Pell Grants are typically awarded to undergraduate students from low-income families for bachelor’s, graduate or professional degrees.

The White House noted in the statement that “nearly every Pell Grant recipient came from a family that made less than $60,000 a year, and Pell Grant recipients typically experience more challenges repaying their debt than other borrowers.”

Since Pell Grants were once given to 60% of the U.S. population, the White House expects 27 million borrowers to receive the full $20,000 in relief. That’s more than half of the 43 million expected to be eligible for the $10,000 relief.

In addition, the White House estimates that 90% of relief will go to people earning less than $75,000. Overall, 20 million Americans could have their debt completely canceled.

The White House has also announced the extension of the moratorium on monthly payments and interest for a “final time” through Dec. 31, 2022.

Save for Your Future

In April, the Department of Education announced an extension of the pause on student loan repayment, interest, and collections, which went into effect in 2020 due to the pandemic, through Aug. 31.

The debt relief will be limited to borrowers who earn less than $125,000 a year for individuals or families earning less than $250,000, according to the official White House Statement.

More From GOBankingRates

BEFORE YOU GO

See Today's Best
Banking Offers