Student Loan Forgiveness Updates: Next Steps for Qualifying Borrowers

Live Updates
  • President Joe Biden unveiled his plan to forgive federal student loan debt for millions of Americans Wednesday. The long-awaited announcement fulfills one of Biden's key campaign promises.
  • Up to $20,000 will be forgiven for qualifying students who attended college on Pell Grants and up to $10,000 for those who did not receive Pell Grants. Borrowers earning less than $125,000 a year would be eligible.
  • In addition, the administration extended the student loan pause one final time, through December 31, 2022. An application for student debt forgiveness will be available through the U.S. Department of Education before the repayment pause ends.
  • Democrats have criticized the plan calling for broader relief, while moderates and Republicans question its fairness. The plan could erase student debt for millions of Americans.
  • Experts have begun weighing in on how they think Biden's plan will impact the U.S. economy and whether they believe it will help or hurt inflation.

Live Updates Have Ended.

Next Steps for Qualifying Borrowers

The U.S. Department of Education (DOE) on Thursday outlined the next steps for student loan borrowers following President Joe Biden's student debt forgiveness announcement.

Several details of Biden's plan have already been announced, but the DOE said more information will be coming in the weeks ahead.

On Thursday afternoon, the DOE's Federal Student Aid office posted an explanation on its website of what Biden's plan means for borrowers. The office clarified that those who qualify for up to $10,000 or up to $20,000 in debt relief will be "capped at the amount of your outstanding debt," meaning people who qualify for an amount greater than what they owe will only receive the amount required to wipe out their debt.

The DOE estimated about 8 million borrowers will receive debt forgiveness "automatically" but said others will need to fill out a "simple application" that will be available "in the coming weeks."

The DOE encouraged student loan borrowers interested in receiving alerts about when the debt relief application is open to subscribe for DOE email announcements.

The debt relief application will be accessible before the ongoing repayment pause ends on December 31. All student loan borrowers who still owe money will be asked to resume payments in January.

Plan Covers Graduate School Debt

President Joe Biden's new student debt forgiveness plan will apply to qualifying borrowers who took on federal loans to pay for either an undergraduate or graduate school education.

An estimated 43 million people have student loans that will qualify for debt forgiveness under the new plan, the White House said Wednesday. Federal student loan debt in the U.S. exceeds $1.6 trillion, according to the Education Data Initiative (EDI), which analyzes federal data. The average borrower owed about $37,667, according to an EDI analysis updated late last month.

While less than a third of all undergraduate students use federal student loans to pay for college, undergraduate debt accounts for about 93 percent of all federal student debt, according to the EDI. About two-thirds of all graduate students also borrow federal money to pay for their degrees, the EDI analysis said.

The White House said Wednesday federal student loan borrowers who make less than $125,000 per year will qualify for up to $10,000 in debt forgiveness, while Pell Grant recipients who make under $125,000 each year will see up to $20,000 forgiven. Current students who have taken out federal student loans and who are claimed as dependents by their parents can also qualify for debt forgiveness based on their parents' income brackets.

When Biden's debt forgiveness is applied to existing loans, the money will count toward the total amount—including interest—that is owed, the Associated Press reported.

Borrowers who have continued to make payments during the temporary repayment pause put in place during the early days of the coronavirus pandemic will be able to apply for a refund through the company overseeing their loans, according to the Federal Office of Student Aid.

Loan Forgiveness is Tax-Free Through 2025

President Joe Biden announced his plan to forgive student loan debt for millions of Americans Wednesday -- so what are the tax implications?

If you qualify for the plan, any student loan debt forgiven will not be considered federal taxable income through 2025, Edvisors Director of Corporate Communications Elaine Rubin tells Newsweek.

"Due to a recent change included in the American Rescue Plan of 2021," Rubin explained.

"Now when it comes to state tax, that may be a different story. It's always best to check with a legal tax professional determine the impact when you file your state returns. But borrowers should know, the majority of states will follow federal tax rules."

Likewise, any amount forgiven under the Public Service Loan Forgiveness (PSLF) program also will not be considered federal taxable income, Rubin explains.

Borrowers employed by a non-profit, the government or the military "may be eligible to have all of their student loans forgiven through the PSLF program," the Federal Student Aid office writes. This is due to time-limited changes that waive certain eligibility criteria within the program, effective through October of this year.

"Public Service Loan Forgiveness is current offering student loan waivers for many of the eligibility requirements to make it easier for borrowers to achieve 120 qualifying payments," Rubin tells Newsweek.

"Under normal Public Service Loan Forgiveness rules, a borrower would need to make 120 qualifying on-time payments on a direct loan while working full-time for an eligible employer, while repaying their loan under an eligible repayment plan. The waivers now allow borrowers to receive credit for past months in repayment."

"Essentially, borrowers will need to demonstrate that months they were working full-time for an eligible employer, the other eligibility requirements are being waived," she said.

Those waivers are set to expire on October 31.

The U.S. Department of Education and Federal Student Aid (FAFSA) will answer questions about PSLF and how to take advantage of the waiver benefits tonight on Twitter Spaces at 7 p.m. ET. Rubin previously worked for the U.S. Department of Education's office of Federal Student Aid.

Who Can Get Pell Grants

Some people struggling to pay off student loans will be eligible for up to $20,000 in debt forgiveness if they used Pell Grants to help pay for college.

The money is part of President Joe Biden's new student loan forgiveness plan, which he announced on Wednesday.

The White House estimated about 43 million Americans will qualify for some student debt relief and said more than 60 percent of student loan borrowers, or about 27 million people, are Pell Grant recipients.

White House graph on Pell Grant recipients
A White House fact sheet on President Joe Biden's student debt forgiveness plan included a graph on Pell Grant recipients, which was based on data from the U.S. Department of Education. White House

Pell Grants are awarded by the federal government and do not require repayment. Students who receive Pell Grants are undergraduates who "display exceptional financial need." The White House said "nearly every" Pell Grant recipient is from a family that has an annual income of under $60,000.

Students who receive Pell Grants "typically experience more challenges repaying their debt than other borrowers," a White House fact sheet said, and will thus be eligible for up to $20,000 in debt forgiveness under Biden's plan.

Experts Predict Impact on Inflation

Economic experts at Goldman Sachs predict President Joe Biden's student loan forgiveness plan will have a "small" impact on spending and a "similarly small" impact on inflation.

In a Thursday note to clients obtained by Forbes, the company wrote that the anticipated impact the plan will have on inflation will be "more than fully offset" by Biden's announcement that a years-long loan repayment pause will end by the start of 2023. The pause was initially put in place as temporary relief in the early days of the coronavirus pandemic and will now end on December 31.

A chief economist at Goldman Sachs reportedly said the plan will have a general effect of "slightly" bringing inflation levels down.

White House press secretary Karine Jean-Pierre pointed to Goldman Sachs' projections while discussing the plan during a Thursday afternoon press briefing.

"Independent experts like Goldman Sachs agree the president's plan will not have any meaningful impact on inflation," Jean-Pierre said. "In fact, Goldman Sachs and others estimate that it will reduce inflation."

Jean-Pierre contrasted what she described as the Biden administration's "fiscally responsible" plan with actions by former President Donald Trump's administration.

"What we have done is fiscally responsible. What the last administration did was not," she said.

Karine Jean-Pierre addresses student debt relief
White House press secretary Karine Jean-Pierre speaks during the daily press briefing in the Brady Press Briefing Room of the White House in Washington, D.C., on August 25, 2022. OLIVIER DOULIERY/AFP via Getty Images

Biden Won't Apologize for Helping 'America's Middle Class'

President Joe Biden continued to push his administration's student loan forgiveness plan Thursday, saying it will help the middle class and narrow the racial wealth gap.

In a tweet Thursday, Biden pushed back against Republican U.S. Congressmembers who critcized the plan.

"To those Republicans in Congress who believe student debt shouldn't be forgiven... I will never apologize for helping America's middle class," Biden tweeted Thursday. "Especially not to the same folks who voted for a $2 trillion tax cut for the wealthy and giant corporations that racked up the deficit."

Biden continued saying the plan will help middle class and working families who "need more breathing room." The plan would forgive up to $20,000 for qualifying students who attended college on Pell Grants and up to $10,000 for those who did not receive Pell Grants. Borrowers earning less than $125,000 a year would be eligible.

Biden also argues the plan will help narrow the "racial wealth gap and advance racial equity."

"The burden of student loan debt is especially heavy for Black and Hispanic borrowers who on average have less family wealth to rely on to pay for college. And the pandemic only made things worse," Biden said.

Biden made the comments hours before his scheduled departure to Maryland, where he will hit the campaign trail Thursday.

Hannity Calls Plan 'Vote Buying Act of 2022'

Fox News host Sean Hannity slammed President Joe Biden's student loan forgiveness plan, calling it a ploy to buy votes ahead of the midterms.

The host critcized the plan hours after Biden's announcement Wednesday on "Hannity."

"In reality, it should be called the Biden Bribery and Vote Buying Act of 2022," Hannity said Wednesday night. "All paid for by you, the hardworking American people and truck drivers and farmers and welders and small business owners and members of the military and waiters and waitresses and bartenders and taxpayers that never went to college, or maybe they already paid off their student loans."

"Now, this massive $300 billion payout is either going to be paid for with your tax dollars or by simply printing more money."

About 24 hours after announcing the plan, one of Biden's 2020 campaign promises, the president is set to hit the campaign trail ahead of midterm elections. He is headed to Maryland Thursday where he will attend a reception for the Democratic National Committee followed by a rally, according to the White House.

"Today, my Administration is meeting my campaign commitment with targeted debt relief to folks from families who need it most," Biden tweeted Wednesday.

Midterm elections are 75 days away.

How Plan Could Impact Housing

Experts say President Joe Biden's student debt forgiveness plan isn't expected to have a large impact on the housing market.

While the $10,000 to $20,000 in relief Biden announced Wednesday for qualifying borrowers might help some people who were already nearing the ability to purchase a home, the relief likely won't make enough of a difference for borrowers who are still struggling with large loan amounts, housing experts told Even so, experts said the thousands in forgiveness could help those with large loans inch closer to being able to someday purchase a home.

Logan Mohtashami, a lead analyst, predicted the amount of debt forgiveness per borrower would have a "negligible impact" on home purchases but said it can "free up some cash flow for renters."

"For those who finished college and have good-paying jobs, on the margin, it can help, but nothing in a significant fashion," Mohtashami said.

Predictions on how the loan forgiveness plan will impact housing came amid high inflation and high mortgage rates, the latter of which hit an average of 5.55 percent this week.

Texas Senator Ted Cruz criticized Biden's plan on Thursday with a nod to high mortgage rates.

"Biden's $300 Bn student loan giveaway to wealthy college grads throws gasoline on raging inflation, which hammers first-time home buyers," Cruz said on Twitter. "Now, mortgage rates are higher."

Student debt relief impact on housing
A 'For Sale' sign is displayed in Falls Church, Virginia, on April 2, 2022. STEFANI REYNOLDS/AFP via Getty Images

Trump Calls Plan a 'Money Grab'

Former President Donald Trump criticized President Joe Biden's student loan forgiveness plan on Thursday, calling the debt relief strategy a "money grab."

In a statement released by his Save America PAC, Trump said Biden and "Radical Left Democrats" had through their plan "orchestrated another election enhancing money grab, this time to the tune of $300,000,000,000." Economic experts have projected the plan will cost about $329 billion over the next 10 years.

Trump said the money for this debt relief will come from "working-class Americans who are struggling the most," adding that he "predicted" this would be the case.

He then cited other issues the U.S. is currently facing, such as inflation and high energy prices.

"But if that wasn't enough, now Americans are bailing out College Administrators who fleeced students, and those who opted for Degrees there was no way they could afford," Trump said. "America is a nation in decline, and the cliff into oblivion is within sight."

Trump's statement concluded with a call for people to stop casting ballots for members of the Democratic Party.

Warren Slams 'Out-of-Touch' Critics

Senator Elizabeth Warren of Massachusetts responded to "out-of-touch Republican" critics of President Joe Biden's student loan debt relief plan in a Thursday tweet.

Warren said the plan's GOP critics "are attacking the president for canceling student debt because they're not interested in helping working people."

"But Democrats are putting Washington on the side of families—not powerful special interests," her tweet said.

Warren celebrated the "transformative" announcement in a series of tweets on Wednesday. She is part of a group of progressive Democrats who have called for more student debt forgiveness than the amount Biden introduced on Wednesday but said the president's announcement "paves the way for even more victories to come, if we keep fighting side by side."

In the wake of Biden's announcement, a video clip of Warren from early 2020 resurfaced. It showed Warren attending a campaign event during her 2020 bid for the Democratic presidential nomination. In the clip, Warren was asked by an event attendee if her advocacy for student debt relief would also benefit those who already paid for college.

"Of course not," she said in the clip.

The video was viewed more than 3.3 million times as of Wednesday afternoon.

Limited Waiver Available for Public Service Loans

The U.S. Department of Education and FAFSA will answer questions about Public Service Loan Forgiveness (PSLF) tonight on Twitter.

Three PSLF pros will host a conversation on Twitter Spaces to answer questions and discuss a limited waiver to have "additional payments count towards PSLF." The waiver ends on October 31 of this year.

"Get answers to your questions & learn how to take advantage of a limited-time waiver to have additional payments count towards #PSLF," the U.S. Department of Education tweeted Thursday.

The conversation is scheduled for Thursday, August 25 at 7 p.m. ET.

Plan Could Cost $2K Per Taxpayer

Tax experts say President Joe Biden's student loan forgiveness plan could cost an average of $2,000 for every taxpayer.

Though Biden didn't detail his plan until Wednesday, some people familiar with last-minute negotiations told reporters it would likely cancel up to $10,000 in student loans for some and up to $20,000 for qualifying borrowers who used Pell Grants to pay for college. The National Taxpayers Union Foundation (NTUF) used these anticipated details in its Tuesday assessment of the plan's potential impact on taxpayers.

The NTUF said it referenced estimations from the Penn Wharton Budget Model to arrive at its prediction of what the Biden administration's student debt relief plan will cost. The Penn Warton Budget Model reported the plan will likely cost $329.1 billion over the course of 10 years.

Based on those assessments, the NTUF said it estimates Biden's plan "would cost the average taxpayer over $2,000."

"There were just under 158 million taxpayers in 2019 according to the IRS, meaning that the average cost of debt cancellation is $2,085.59 per taxpayer," the organization said.

The NTUF broke down what the average costs would be for taxpayers within different income brackets. For taxpayers who make less than $50,000 per year, the cost of Biden's student loan forgiveness plan is predicted to be $158.27. That cost jumps to more than $800 for taxpayers who make between $50,000 and $75,000 per year, and to more than $3,000 for those who make between $100,000 and $200,000 per year.

GOP Says 'Wealthy Borrowers' Benefit

Republicans in the House Committee on Education and Labor said President Joe Biden's plan to forgive student loan debt for an estimated 43 million Americans will benefit "wealthy borrowers."

A joint statement released Wednesday by the committee's Republican leader, Rep. Virginia Foxx and by House Budget Committee GOP Leader Rep. Jason Smith, said the repayment responsibility will now shift to the 87 percent of Americans who either paid off their student loans already or did not take on any student debt.

Foxx and Smith also said the student loan forgiveness plan will elevate inflation, which has already hit decades-high levels this year.

"This $300 plus billion transfer of wealth to the 13 percent of Americans who have student loans makes clear what the priorities of this administration are,"Foxx said in the joint statement. "On average, those receiving relief will go on to make over a million dollars more than the Americans who never attended college and are forced to foot the bill for someone else's degree."

The Biden plan and other recent "reckless spending sprees" demonstrate "why Americans distrust the federal government so much," Foxx said.

Smith said the plan will "throw more fuel on the inflation fire by erasing debt for wealthy families earning as much as $250,000, at a cost to American taxpayers of more than $330 billion." He suggested Biden and other Democrats in Congress are "engaged in a desperate pander to their far-left political supporters" ahead of the midterm elections this fall.

"This immoral transfer of wealth from the working class to the wealthy comes on top of the Biden Administration's completely illogical decision to issue yet another extension of the COVID-era moratorium on student loan repayments, which also disproportionately benefits high income earners," Smith said.

Biden Responds to Fairness Query

After President Joe Biden delivered public remarks about his administration's new student loan debt forgiveness plan, a reporter asked if the strategy was "unfair" to people who have either already paid off their student debt or never accumulated any.

Biden was about to leave the briefing area inside the White House's Roosevelt Room Wednesday afternoon when he paused to respond to the reporter's question with a query of his own.

"Is it fair to people who, in fact, do not own multi-billion dollar businesses, if they see one of these guys getting all the tax breaks? Is that fair?" Biden said.

During remarks delivered moments earlier, Biden said he found it "interesting" that some of his "Republican friends" voted for tax cuts in the past but spoke out against student loan forgiveness now. While many Democrats have advocated for student loan relief that goes further than Biden's Wednesday plan, many Republicans have denounced the idea of forgiving any student loan amount.

Biden said his plan "focuses the benefit on middle-class and working families" and will benefit "both current and future borrowers."

"I believe my plan is responsible and fair," Biden said.

Fox Host Likens Relief to Heroin Use

Will Cain, the co-host of Fox and Friends Weekend, compared President Joe Biden's student loan forgiveness plan with heroin use during a Wednesday appearance on Fox News' America Reports.

Cain said the plan will "rise the cost of college once again" and "only serve to hurt the long-term equation." The cost of attending a four-year public university has nearly tripled since 1980, according to a White House fact sheet released earlier Wednesday.

Cain compared health care with college, saying both are "hyperinflationary."

"What's the metaphor for forgiving college debt? It would be like someone who is addicted to heroin who is going through horrendous withdrawals," Cain said. "And there's a certain person in the room who says the only thing we can do to do away with these withdrawals is give them another bump of heroin."

Education Secretary Applauds Plan

Secretary of Education Miguel Cardona celebrated the new student loan forgiveness plan announced Wednesday that the White House says will relieve student debt for an estimated 43 million borrowers.

Working toward a college degree "should give every person in America a leg up in securing a bright future," but "student loan debt has hindered" the pursuit of actions like home purchases and starting new businesses for many people who have student debt, Cardona said.

"Getting an education should set us free; not strap us down!" he said in a statement shared by the U.S. Department of Education.

"Today, we're delivering targeted relief that will help ensure borrowers are not placed in a worse position financially because of the pandemic, and restore trust in a system that should be creating opportunity, not a debt trap," his statement added.

Cardona expanded upon his earlier comments in a Wednesday afternoon tweet, which said the student loan debt forgiveness plan will "help millions of middle-class families ensuring that borrowers are not worse off financially due to the pandemic – with nearly 90% of relief going to borrowers earning less than $75,000 per year."

Miguel Cardona at White House
President Joe Biden announces student loan relief with Education Secretary Miguel Cardona (R) on August 24, 2022 in the Roosevelt Room of the White House in Washington, D.C. OLIVIER DOULIERY/AFP via Getty Images

Payment Relief Timeline Cut for Some

In addition to the student loan debt forgiveness amounts President Joe Biden announced on Wednesday, he said additional relief will be available to some borrowers.

The debt forgiveness he outlined will benefit an estimated 43 million qualifying student loan borrowers, Biden said, some of whom could get up to $10,000 or $20,000 in debt relief.

Moving forward, Biden said his administration will be slicing monthly payments in half for undergraduate student loans as part of the Department of Education's income-based repayment plan. While these borrowers typically have income-based payment plans that require them to pay 10 percent of their income each month, the new plan will only require payments equal to 5 percent of their discretionary income, according to a White House fact sheet.

Borrowers who took out student loans valued at $12,000 or less will have their loans forgiven after 10 years instead of 20, Biden said.

"These changes will save more than $1,000 a year on average for the borrower," Biden said. "It's a game changer."

Biden said his administration is also "fixing" part of the Public Service Loan Forgiveness Program, which he said has been "driving me crazy" since before he entered the White House. The program is designed to provide people with a way to get their student debt forgiven if they spend at least 10 years of their career working in public service, but Biden said the program has been "a mess" and described it as "so restrictive."

Biden encouraged people who work in public service to visit the program website before the end of October to review updated terms and see if they qualify for loan forgiveness.

Biden Says 43M Borrowers to Benefit

About 95 percent of all borrowers with student loan debt will benefit from the White House's new debt forgiveness plan, according to President Joe Biden.

An estimated 43 million people will benefit from the steps the federal government is taking to relieve student debt and refine repayment processes, Biden said during public remarks delivered Wednesday afternoon.

Of those 43 million people, about 60 percent—or around 27 million people—used Pell Grants to help pay for their college education, he said. Those borrowers who qualify could get up to $20,000 in debt relief under the new plan.

About 45 percent of borrowers could see their student debt wiped out entirely, Biden said.

"That's 20 million people who can start getting on with their lives," he said. "All this means people can start to finally crawl out from under that mountain of debt."

College Cost Since 1980 Nearly Tripled

The cost of attending a four-year college has nearly tripled in the last four decades, according to a White House fact sheet.

Released after President Joe Biden's Wednesday announcement about student loan debt forgiveness, the fact sheet explored some of the ways the Biden administration said its debt forgiveness plan will benefit borrowers.

While the average cost of attending a four-year public university was about $8,000 in 1980, that cost jumped to about $22,000 by 2021, a graph provided by the White House said. The administration said costs have been on the rise over the last four decades even after taking inflation into account.

Pell Grants, which the U.S. Department of Education said are typically given to undergraduate students who "display exceptional financial need," used to cover almost 80 percent of the cost associated with an undergraduate degree but currently cover about one-third of those costs.

"That has left many students from low- and middle-income families with no choice but to borrow if they want to get a degree," the White House said, adding that the average student loan amount a borrower is left with is about $25,000.

White House student loan forgiveness graph
A graph provided by the White House shows how the cost of attending a four-year public university has jumped since 1980. White House

The 5 States Where Residents Owe the Most, Least Debt

Washington D.C. residents have the highest average federal student loan debt in the nation at nearly $55,000 per borrower, according to the Education Data Initiative.

Across the country, adults between 25 and 34 years old are the "largest indebted age group," the report found.

"Debt variations among states are often due to socioeconomic factors, such as a higher concentration of health specialists with medical school debt," the report states. Below is a breakdown of the top 5 states with the highest and lowest average borrower debt in federal student loans.

Top 5 Highest:

  1. Washington, DC: $54,945
  2. Maryland: $42,861
  3. Georgia: $41,639
  4. Virginia: $39,165
  5. Florida: $38,459

Top 5 Lowest:

  1. North Dakota: $28,604
  2. Iowa: $30,464
  3. South Dakota: $30,954
  4. Wyoming: $31,250
  5. Oklahoma: $31,525

How to Watch Biden's Remarks

President Joe Biden will soon unveil details of his student loan debt relief plan.

Biden is scheduled to deliver remarks at 2:15 p.m. ET from the Roosevelt Room. Watch live here or below.

Some Democrats Wanted $50K in Relief

While many Democrats celebrated President Joe Biden's Wednesday student loan debt relief announcement, some party members had wanted more student debt forgiven.

Senate Majority Leader Chuck Schumer and Massachusetts Senator Elizabeth Warren, both of whom were on the frontlines of the battle for student debt relief, applauded the Wednesday announcement of up to $10,000 for some qualifying borrowers and up to $20,000 for others. Schumer described the announcement as "a giant step forward," and Warren said the day was one "of joy and relief."

Schumer and Warren previously advocated for canceling $50,000 in student loan debt alongside some of their Democratic colleagues in Congress. As the final details of the plan were ironed out this week, Schumer reportedly called Biden to encourage forgiving as much debt for student borrowers as possible.

Rep. Ayanna Pressley of Massachusetts on Tuesday reiterated the call for $50,000 in debt forgiveness. On Wednesday, Pressley celebrated the student loan forgiveness discussion moving "from hushed dinner table conversations to the White House" and called the plan "a victory for the movement and so many families."

Rep. Scott Peters also applauded the plan announced on Wednesday as "good news" for "millions of Americans" who have accumulated student loan debt.

"Addressing the costs of higher education should be the next priority on our list," Peters tweeted.

Most Americans Worry Plan Will Worsen Inflation

Most Americans believe student loan forgiveness will make inflation worse, according to a recent CNBC survey.

The survey found that 59% of Americans worry forgiving loans will worsen current inflation. The survey, conducted by Momentive, posed the question to more than 5,100 adults between August 4 and 15.

The findings further highlight the ongoing debate over the idea.

About 30% of respondents were against student loan forgiveness for anyone. Another 34% said only those "in need" should be eligible for loan forgiveness and 32% supported forgiveness for anyone in debt.

Among those polled, more men than women were against loan forgiveness.
Currently, federal student debt tops $1.6, according to the Associated Press.

Senator Ted Cruz shared the results of the survey, saying "canceling student loan debt will make #Bidenflation go even higher."

Senator Rick Scott also criticized the plan as he shared the survey's findings.

"Wiping out millions of dollars in student loans doesn't solve the problem," Scott said. "Instead, it forces millions of hardworking Americans, already struggling to afford high prices, to foot the bill for other people's degrees. And it could make inflation even worse."

Republicans Criticize Biden's Plan

Republicans are criticizing President Joe Biden's plan on student loan debt forgiveness.

Biden described the plan as one that will "give working and middle class families breathing room" before student loan payments resume next year. In response, House Republicans said that Biden's description of the plan was "a lie."

"Hardworking Americans will be the ones footing the bill for the liberal elites' student loans," House Republicans tweeted Wednesday.

House Minority Leader Kevin McCarthy also said the plan will make "hard-working Americans" responsible for paying off the debt.

The debt forgiveness plan will cost $300 billion or more, McCarthy said on Twitter, with "most benefits" going to "households in the top 60% of earners."

Rep. August Pfluger of Texas called the debt forgiveness plan "a slap in the face of every student and family who budgeted, saved, chose an affordable university, deferred their education, and/or worked through college."

"Loans are not 'forgiven,'" Pfluger tweeted. "They will be paid for by you, the American taxpayer."

Rep. Jason Smith, the House Budget Committee's GOP leader, described the plan on Twitter as "yet another giveaway to the wealthy by Washington Democrats," and Rep. Jim Jordan of Ohio tweeted that the loan forgiveness plan will "benefit wealthy elites."

North Dakota Senator Kevin Cramer said during a Tuesday appearance on Fox Business that the plan "just enhances these reckless decisions" by people who take out student loans but never finish college.

"We oughta have people making more thoughtful decisions and applying good economic principles, as well as their personal circumstances," Cramer said. "Then you have fairness and a much more economically literate electorate."

Biden to Deliver Remarks This Afternoon

President Joe Biden will unveil his plan to forgive federal student loan debt for millions of Americans this afternoon.

Biden is set to deliver remarks from the Roosevelt Room at 2:15 p.m. ET.

The president shared some details of the plan hours before the anticipated announcement. The Biden administration is expected to forgive $20,000 for students who attended college on Pell Grants and $10,000 for those who did not receive Pell Grants.

Americans with federal student debt who earn less than $125,000 are eligible for the program. In addition, the administration will extend the student loan pause one more time through December 31, 2022.

The plan also says those with undergraduate loans "can cap repayment at 5% of your monthly income."

"In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023," Biden tweeted late Wednesday morning. "I'll have more details this afternoon."

Payment Freeze Could Be Extended

President Joe Biden is on Wednesday expected to announce a continuation of the student loan payment freeze currently in place as part of a larger announcement about student loan forgiveness.

The pause is currently set to expire on August 31. People familiar with the Biden administration's plan told the Associated Press that the president is expected to announce an extension on the payment freeze that would last until January.

Student loan payments were initially paused in the early days of the coronavirus pandemic during former President Donald Trump's administration. Biden has repeatedly extended the pause since starting his term in the White House.

Millions Could See Debt Erased

President Joe Biden's expected announcement today on student loan forgiveness could erase debt for millions of Americans.

Some 43 million Americans currently have federal student debt, according to the Associated Press. About one third, or 14 million, owe less than $10,000 -- meaning the expected announcement would completely eliminate their debt.

Forgiveness of up to $10,000 would also make a significant difference for millions more. Half of borrowers with federal student debt owe less than $20,000, AP reports.

Last year, the average student debt hit a record high of $37,000.

Americans who have already paid off student loans are not expected to see any benefit from the plan. It is expected to only apply to those with current debt.

Student loan forgiveness
New graduates walk into the High Point Solutions Stadium before the start of the Rutgers University graduation ceremony in Piscataway Township, N.J., on May 13, 2018. President Joe Biden is expected to announce Wednesday Aug. 24, 2022 that many Americans can have up to $10,000 in federal student loan debt forgiven. Seth Wenig/AP Photo

What Biden Is Expected to Announce

President Joe Biden is expected to announce a sweeping student loan forgiveness plan on Wednesday.

People familiar with last-minute negotiations surrounding the plan told the Associated Press that it could wipe out as much as $10,000 for qualifying borrowers. Individuals who earn less than $125,000 each year would reportedly qualify for loan forgiveness under this new plan.

Loan forgiveness is expected to apply to students who borrowed money for their studies through a federal student loan program, sources told the AP, while people with private loans may not be eligible.

Discussions about what exactly would be included in the student loan debt forgiveness plan were ongoing in the days leading up to Biden's anticipated announcement. Among the other potential aspects of the plan was debt forgiveness in greater amounts for some borrowers, according to the AP.