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In a three-part plan, President Joe Biden announced Wednesday that he plans to cancel up to $10,000 in student debt for college graduates with federal student loans currently earning less than $125,000 per year. The relief also extends to parents who took out Parent PLUS loans

Additionally, under the new plan, graduates who received Pell Grants during their time at school — federal grants issued to students who demonstrate “exceptional financial need” — are eligible to have up to $20,000 of their student debt forgiven. These graduates still have to meet the income threshold to qualify.

The administration also announced its goals to provide future support for student borrowers. The White House proposes capping payments, at 5 percent of monthly income, down from the current 10 percent. Loans balances of $12,000 or less would also be forgiven after 10 years of payments rather than 20 — which is the current timeframe for loan forgiveness.

According to a press release from the White House Wednesday, the average undergraduate leaves college with $25,000 in student debt, while the total student loan debt in the United States sits at a hefty $1.6 trillion. The median student debt in Ann Arbor was 16 percent above the national average in 2021 at $29,000, with the city ranking in the top 15 places affected by student debt across the country in 2019.

Biden had been promising “immediate” student debt relief since he launched his campaign for the 2020 election, and conversations pertaining to debt forgiveness have been percolating in the Capitol for months. Since Biden took over the Oval Office in 2021, he has continued to pause payments on federal student loans, with the latest pause set to expire the last day in August.

“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 wrote in a tweet Wednesday morning. 

As a part of the plan released Wednesday, Biden has once again promised to extend the pause on federal student loans through the end of the year. Student loan payments will resume in January 2023.

The Department of Justice’s Office of Legal Counsel issued a letter outlining their interpretation of the 2003 HEROES Act which allows the administration to forgive student debt given the ongoing COVID-19 pandemic.

Though Democrats have been pushing the President to forgive up to $50,000 in student loans, several of them took to social media Wednesday morning to celebrate what they see as a positive step forward. Senator Elizabeth Warren (D-MA) has been at the forefront of the loan forgiveness movement, pushing Biden to cancel, rather than pause student debt. 

“Today is a day of joy and relief,” Warren tweeted. “President Biden is cancelling up to $20,000 of federal student debt for as many as 43 million Americans — a powerful step to help rebuild the middle class. This will be transformative for the lives of working people all across this country.”

Meanwhile, Republicans are less enthused by Biden’s new plan, citing concerns that with rising inflation the burden of canceling large amounts of debt will fall on taxpayers. The New York Times reported that the program could cost taxpayers up to $300 billion — though the Times suggested the true cost is “smaller” when taking into account loans that have been, or would be, defaulted on.

Senator Mitt Romney (R-UT) tweeted Wednesday morning that believe the plan was “irresponsible,” and had been put in place to “bribe” young voters in the impending 2024 presidential election, which Biden is expected to run in as the Democratic candidate.

“Sad to see what’s being done to bribe the voters,” Romney tweeted. “Biden’s student loan forgiveness plan may win Democrats some votes, but it fuels inflation, foots taxpayers with other people’s financial obligations, is unfair to those who paid their own way & creates irresponsible expectations.”

Biden is expected to announce more details about the debt forgiveness plan at a briefing at 2:15 PM Wednesday.

Daily News Editor Roni Kane can be reached at ronikane@umich.edu