Biden to Cancel $10,000 in Student Loan Debt for Borrowers Earning Less Than $125,000

President Biden will announce on Wednesday that he is canceling $10,000 in student loan debt for Americans earning $125,000 or less per year and extending a pause on payments for all borrowers until December 31, capping months of anticipation over a campaign promise to provide economic relief to millions of people.

Mr. Biden will announce an additional $10,000 of debt forgiveness for students who received college loans from the federal government.

The administration will say that 90 percent of the relief will go to people who make less than $75,000 a year. The debt relief will only be available to people who earn $125,000 a year or less.

The debt forgiveness is far less than the amount that some Democrats had been pushing for, but it is still a step in the right direction. Legal challenges will make the timing of any relief uncertain.

The question of how far the United States should go in providing debt forgiveness emerged as one of the more contentious issues for Mr. Biden. 45 million people in the United States owe more on federal loans for college than they do on credit cards or car loans.

Debt forgiveness can be used to address racial disparity in the economy. Republicans and some Democrats argue that debt forgiveness will add to inflation because it will give consumers more money to spend.

The relief was targeted by the White House. After the end of the year, all student borrowers will have to repay their loans, ending a pause that was put in place as the recession deepened.

The move could cost taxpayers hundreds of billions of dollars in money that won't ever be repaid. The true cost is harder to calculate because a lot of the debt was unlikely to ever be paid back. One in five borrowers with a payment due had failed to make their loan payments. Many of the people carrying small balances will be able to have their loans canceled.

There are reports that show that Black and other nonwhite borrowers end up with higher average loan balances than their white peers.

Tony Crdenas, a California Democrat who met with the White House to advocate debt cancellation, said that even the limited student debt relief could be the key to Mr. Biden's party's survival.

A lot of young people will be able to have a sigh of relief because they will be able to buy a house soon.

The Hispanic Caucus helped increase pressure on Mr. Biden when they said he indicated in a private meeting that he intended to give debt relief for Americans. The president made a public announcement that he was considering the move and would make a decision in the coming weeks.

The political and economic ramifications of the decision were being debated in the White House. People familiar with the president's thinking say he was worried that loan cancellation would be seen as an insult to those who had paid their tuition. The aides argued that Mr. Biden didn't have the legal authority to move forward with the loan forgiveness.

Inflation made the process more complicated.

How could a student loan handout be justified in the middle of crushing Biden-flation? The top Republican on the Ways and Means Committee is Kevin Brady.

The advisers for Mr. Biden made the case that if the loan forgiveness was linked to income caps, the cancellation would not have much of an effect on consumer prices. The president's chief of staff advised him to give relief to young voters who are frustrated with him.

Senate Democrats appealed to the White House in the days leading up to the decision. Senator Charles Schumer of New York, the majority leader, as well as Senators Elizabeth Warren of Massachusetts and Raphael Warnock of Georgia, met with Mr. Klain and Brian Deese to lobby the White House on student loan forgiveness.

A Democrat familiar with the conversation said that Mr. Schumer asked Mr. Biden to cancel as much debt as possible.

It's not clear who would have the right to press their case in court. The answer may be no one, according to a recent Virginia Law Review article.

An activist who has pushed for loan forgiveness said that Mr. Biden's move was an important first step to support those disappointed by the administration's failure to fulfill other policy goals.

They were told that if they didn't vote, their lives would be in danger. People in these communities are wondering if their vote really matters in the upcoming election.

Her mother borrowed money to pay for her education as well. While some of her peers earned a healthy income, they would also be responsible for supporting younger siblings who might borrow to attend college, as a result of the administration imposing limits on who would receive loan forgiveness based on salary.

She said that you are still taking care of your family and community even though you are in debt. I have to repay my parents for getting me in that position by making sure my brother goes to school. The pressure you have is that.