President Joe Biden stated on Wednesday that he would eliminate up to $10,000 in federal student loan debt for the majority of borrowers, making good on a promise made during the campaign.
Also on Wednesday, Biden tweeted that he would revoke up to $20,000 in Pell Grants for recipients.
Americans earning under $125,000 annually, or $250,000 for married couples or head of family, will be eligible for the relief. The amount of a borrower's outstanding qualified debt is also the relief's maximum limit, according to the Education Department.
According to experts, paying down the debt will release hundreds of billions of dollars for additional consumer spending that might be used to purchase homes, adding a new wrinkle to the country's fight against inflation.
"Earning a college degree or certificate should give every person in America a leg up in securing a bright future. But for too many people, student loan debt has hindered their ability to achieve their dreams - including buying a home, starting a business or providing for their family," Education Secretary Miguel Cardona said in a statement.
The White House said the country's "skyrocketing cumulative federal student loan debt - $1.6 trillion and rising for more than 45 million borrowers - is a significant burden on America's middle class."
Biden's decision was applauded by Democrats who had lobbied for him to forgive up to $50,000 per borrower. The change is opposed by Republicans who are fighting to take back control of Congress in November, who claim it is unjust because it will disproportionately benefit those with higher earnings.
"President Biden’s student loan socialism is a slap in the face to every family who sacrificed to save for college, every graduate who paid their debt, and every American who chose a certain career path or volunteered to serve in our Armed Forces in order to avoid taking on debt," Senate Minority Leader Mitch McConnell said Wednesday.
Due to university tuition costs in the US being significantly higher than in most other wealthy nations, consumers are carrying a staggering $1.75 trillion in student loan debt, the majority of which is owned by the federal government.