President Joe Biden is expected to deliver on a campaign promise Wednesday by confirming the cancelation of federal student loan debt.
Here's what we know so far ahead of Biden's speech at 2:15 p.m. EST:
- Anyone with federal student loan debt who makes less than $125,000 a year will see $10,000 wiped off the books
- Couples that make $250,000 a year will also see $10,000 wiped
- Recipients of federal Pell Grants will see $20,000 in forgiveness
- The Covid-19 pandemic pause on student loan payments will continue; federal student loan holders that are left with some debt have until January 2023 before their payments will resume.
Other student debt companies, including Nelnet Inc. (NYSE: NNI) and Navient Corp. (NASDAQ: NAVI), saw more modest movement Wednesday ahead of the announcement. Navient was up by 0.18% at $16.31 as of press time. Nelnet hovered at around $85.98 per share, down by 0.14%.
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Biden's executive decision is a long-time coming. On the campaign trail in 2020, Biden had pledged to cancel at least $10,000 of student debt per person.
In March, Biden noted on Twitter (NYSE:TWTR) the need to forgive student loans "as proposed" by Senator Elizabeth Warren of Massachusetts.
Additionally, we should forgive a minimum of $10,000/person of federal student loans, as proposed by Senator Warren and colleagues. Young people and other student debt holders bore the brunt of the last crisis. It shouldn't happen again.The move underscores a major shift in the way the federal government has handled the stark reality of student debt and the financial burden higher education puts on college graduates.— Joe Biden (@JoeBiden) March 22, 2020
U.S. student loan debt, which ballooned three times greater than it was in the early 2000s, currently totals $1.748 trillion. The outstanding federal loan balance is $1.62 trillion and accounts for 92.7% of all student loan debt.
Earlier this year, some Republican senators pledged to stop Biden from canceling student loan debt, citing inflation fears. However, economists and the Roosevelt Institute maintain that canceling student debt would not be inflationary.
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