Image from White House livestream

(BIVN) – President Biden on Wednesday took action on student loans, acting to provide “historic and targeted student debt relief.”

During a White House news conference, Domestic Policy Advisor Ambassador Susan Rice explained:

First, the administration is extending the current pause on student loan repayments one final time until December 31st of this year.

Second, the Department of Education is providing up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education and $10,000 in debt cancellation to non-Pell Grant recipients.

This relief is targeted. It will only go to borrowers whose income is less than $125,000 for an individual or $250,000 for a household — meaning that the relief will go to those who need it the most.

Third, the administration is proposing critical reforms to the income-driven repayment plan that will ensure that current and future borrowers will have much smaller and more manageable monthly payments.

This new plan protects more low-income borrowers from making any payments, and caps monthly payments for undergraduate loans at 5 percent of a borrower’s discretionary income, meaning after essentials like rent and food. That is half the rate that people currently pay today.

And borrowers making roughly the equivalent of $15 — the minimum wage — where that applies — won’t have to make any payments at all under this plan.

These changes will reduce the average annual student loan repayment by a thousand dollars a year.

Fourth, thanks to temporary changes that the Department of Education has made to the Public Service Loan Forgiveness program, if you have worked in public service — for example, as a teacher, a government employee, a military service member — for 10 years, even if those years were not consecutive, you are eligible to have all of your federal student loans cancelled.

The Department of Education is working to make these changes permanent. But in the meantime, more than 175,000 people just in the last year have taken advantage of these temporary changes and have had more than $10 billion in loans forgiven.

So my message to everybody today is: If you currently or previously have worked in public service, go now to PSLF.gov — PSLF.gov — to take advantage of this program. But you must do so before October 31st.

Finally, the Department of Education is announcing new actions to hold accountable colleges that have contributed to the student debt crisis, including by publishing an annual watch list of the programs with the worst debt levels in the country and requesting improvement plans from the worst actors.

U.S. Congressman Kai Kahele (D, Hawaiʻi) responded to the news.

“Today, President Biden took pivotal action to unburden student loan borrowers and ensure higher education remains accessible and affordable,” Rep. Kahele said. “43 million borrowers will benefit from the cancellation of $10,000 of student debt and $20,000 for Pell Grant recipients. The President’s relief plan will completely eliminate student loan debt for 20 million people.”

“Canceling student loan debt is essential to closing the racial wealth gap and lowering monthly costs for Americans across the country who are struggling to keep up with the rising costs of essential goods and services,” said Rep. Kahele. “In addition, by ensuring that we cap repayment of undergraduate loans at 5%, this executive action will continue to ensure that everyday Americans are able to pay back their loans while still being able to invest in their futures. I applaud President Biden for continuing his commitment to strengthening our middle class and creating a more equitable America.”