On Aug. 24, President Biden announced a plan forgiving $10,000 of student loan debt per borrower with an annual income under $125,000. This new plan could help millions pay off their student loans.

According to White House spokesman Abdullah Hasan, “[The Biden] Administration has already canceled about $32 billion in debt for more than 1.6 million Americans — more than any Administration in history.” 

Biden’s new plan includes several benefits, the most important being the $10,000 in student loan forgiveness to current borrowers. This only applies to those who have an individual income of $125,000 or less and those with a household income below $250,000. 

For borrowers with a Pell Grant, a form of financial aid provided by the U.S. Dept. of Education to help low-income students attend college, the forgiveness amount doubles to $20,000. According to the Penn Wharton Budget Model, this will cost the White House over $300 billion.

The White House announced that “up to 43 million borrowers will receive relief from Biden’s student debt plan, including eliminating the full remaining balance for about 20 million borrowers.”

Biden’s plan includes a final extension on the student loan freeze until Dec. 31. The Biden Administration has also proposed a new income-based rule where borrowers have to pay no more than 5% of their monthly income, halving the original 10%.

However, many taxpayers still fear that this could cause an increase to the high inflation rate the U.S. already has, but multiple economists say that the inflationary impact would be minimal and not even half a percentage point. 

“I’m not liking this decision at all, because I’m a taxpayer and I know where the government is taking money from to cancel that $10,000 [of debt] for students. It’s our [taxpayers’] money,” Himani Kaushal, professor at the University of North Florida said. “People higher in the [college education] hierarchy need to see what they can do to reduce the overall cost for the students.”

However, President Biden still believes that postsecondary education should be a ticket to a middle-class life, and he is trying to put more plans in place to decrease college costs.

 According to the White House Briefing Room, “the President will continue to fight to double the maximum Pell Grant and make community college free.”