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Originally Published: Aug 24, 2022
Originally Published: Aug 24, 2022 Last Updated: Oct 04, 2022 11 min read
President Joe Biden speaking at a press conference
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This story has been updated to reflect new information released about which loans are eligible for relief.

It’s official: Millions of Americans are set to get up to $20,000 in student loan forgiveness.

President Joe Biden announced the at the end of August, saying that federal student loan borrowers earning less than $125,000 will receive $10,000 in debt cancellation, while borrowers who received need-based Pell Grants during college will be eligible for $20,000 in forgiveness.

The department estimates that some 20 million borrowers could see their loans completely wiped out. The forgiveness will “give working and middle class families breathing room as they prepare to resume federal student loan payments,” Biden said in his announcement.

Monthly payments are now set to resume on Jan. 1, 2023.

The long-awaited decision from Biden comes after an intense debate that divided many Democrats and policy experts over whether loan forgiveness would worsen inflation or be seen as a handout to well-off, college-educated Americans. The loan forgiveness plan is estimated to cost about $400 billion dollars, according to the Congressional Budget Office. (The Education Department's estimate is lower, at $305 billion.)

Republicans criticized the announcement as an insult to taxpayers who’ve already paid off their loans or chose not to go to college. Others argued it was a good first step, even though it still falls short of the $50,000-per-borrower automatic cancellation that some Democrats and advocates, including the NAACP and Student Borrower Protection Center (SBPC), wanted.

“This progress is historic, but also just a start,” SBPC Executive Director Mike Pierce said in a statement. “Debt-free higher education remains out of reach for most people. On our current course, tens of millions of families will continue to struggle under the weight of student debt for decades to come.”

Debt forgiveness on this scale is unprecedented in the history of federal student loans. Experts say putting the policy into action will be an operational challenge that could drag on for months, particularly because there are still outstanding questions about the legality of Biden using his executive power to cancel the loans.

This is a developing story, and the administration hasn’t shared many specifics. Here’s what we know so far about who is eligible for student loan forgiveness: