President Joe Biden announced a highly anticipated plan Wednesday to offer student loan relief to more than 40 million people, a move supporters hope will have life-changing ramifications for borrowers, particularly women, who hold two-thirds of student loan debt, and women of color, whose loan debt is highest. 

Biden is forgiving $20,000 in student debt for Pell Grant recipients and $10,000 in federal student loan debt for borrowers earning $125,000 or less annually. He is also making reforms to lessen the debt burden on borrowers in the public service loan forgiveness program and income-driven repayment plans, allowing those with undergraduate student loans to cap repayments at 5 percent of their monthly earnings. Through the end of the year, and for the final time, the president is extending the payment pause on student loans that took effect after the COVID-19 pandemic began in 2020. 

Biden’s initiative is expected to provide relief to up to 43 million borrowers, including roughly 20 million for whom remaining balances will be eliminated. It stands out as the most ambitious proposal to date by a president to tackle a situation widely described as a crisis, as student loan debt tops $1.7 trillion.

The average borrower has student loan debt of more than $30,000, but the number is much higher for women of color. On average, Black women owe $41,466, Native American women owe $36,184 and Pacific Islander women owe $38,747 a year after college graduation compared to White women, who owe $33,851, according to the American Association of University Women. Asian-American women and Latinas fare better shortly after college, carrying just under $30,000 in debt, but that changes if they enter graduate school. 

Pursuing a postgraduate degree leaves women of all races with at least $55,000 in student debt. Black women have the most debt, $75,085, after graduate school. Graduate school does not improve the gender wage gap; women earn 81 percent of what men make overall. 

Recipients of Pell Grants, a financial award based on need, are from families with incomes of less than $60,000 annually, according to the White House press office. Pell Grant recipients make up more than 60 percent of the borrower population and comprise about 27 million borrowers eligible for $20,000 in relief. Black students are twice as likely to be Pell Grant recipients than their White counterparts.

During his 2020 presidential campaign, Biden indicated that he would offer relief to the Americans disproportionately impacted by student loan debt, or sway Congress to do so, if elected. 

“In keeping with my campaign promise, my administration is announcing a plan to give working and middle-class families breathing room as they prepare to resume federal student loan payments in January 2023,” Biden said in a Twitter announcement Wednesday. 

During a press conference about his relief plan later in the day, Biden framed debt forgiveness as an economic necessity.

“We’re going to be out-competed by the rest of the world if we don’t take action,” he said. “Here’s the deal: The cost of education beyond high school has gone up significantly. The total cost to attend a public four-year university has tripled, tripled in forty years — tripled. Instead of properly funding public colleges, many states have cut back support for their state universities, leaving students to pick up more of the tab.”

Belma Moreira of Massachusetts is among the borrowers whose student debt will be eliminated under Biden’s debt relief program. The Afro-Latina mother of four started 2022 with roughly $25,000 in student debt, but more than half of what she owed was eliminated earlier this year. In June, the Biden administration announced that it would forgive the debt of students who attended the for-profit Corinthian Colleges, which Moreira enrolled in 16 years ago to pursue a career as a massage therapist. In 2013, she attended another college to study to be an esthetician and still had an outstanding loan balance of $9,000 from her time there. She now expects her debt to be paid off. 

“That will benefit me tremendously, because now I’m not gonna have any loans to pay, at least for the moment,” said Moreira, 36, who is now studying social work at a community college. Carrying student loan debt for 16 years has adversely affected her mental health, especially as a single parent, but Economic Mobility Pathways, a national nonprofit based in Boston that provides support to families with low incomes, has helped her navigate her financial challenges. “I went back to school to be able to provide for my kids in a better way and … then once you graduate, that doesn’t happen and you’re still stuck in that hamster wheel,” she said. “It’s just a headache. It’s stressful. It’s depressing. It makes you feel like a failure.”

Constant communication from student loan servicers and fears about how her debt affected her credit score didn’t help. With debt forgiveness, she expects to be able to live more comfortably and not have to worry about which bill she can’t afford to pay in a given month.

Debt relief proponents have been pressuring the president to fulfill his campaign promise since he took office nearly two years ago. Progressive Democrats such as Rep. Ayanna Pressley and Sen. Elizabeth Warren, both of Massachusetts, have repeatedly called on the Biden administration to forgive at least $50,000 in student debt, but each of them celebrated the president’s relief plan after its announcement despite the fact that it falls short.

Borrowers should applaud Biden’s debt relief plan, Warren said during a CNN appearance Wednesday. She called the steps the Biden administration has taken to forgive debt “powerful” and “important.” 

“There are millions of people right now who should be celebrating over what they have just heard, because their financial lives have just gotten a whole lot better,” she said. The relief will help borrowers who are “disproportionately African Americans, disproportionately veterans, disproportionately parents and disproportionately first-generation students,” she added. “So, this is about helping America’s working class, America’s middle class, and really targeting that relief, most relief, to those who need it most.”

Pressley was also enthusiastic about the relief plan, attributing it to the hard work of advocates of debt forgiveness. “We pressed for this on behalf of and in partnership with families across America — the Black and Brown folks, the women, the students, the workers, the elderly, the parents, the teachers, the young people, and more — who have been devastated by this nearly $2 trillion crisis, because it is a kitchen table issue impacting folks from every walk of life,” she said in a statement. 

During his announcement Wednesday, Biden noted that many college graduates no longer have access to the middle-class lifestyle that a college degree once provided and that young people are delaying starting families and other milestones because of student debt. The COVID-19 pandemic, he said, has only made economic conditions worse for borrowers. Debt relief will allow borrowers “to start finally crawl[ing] out from under that mountain of debt to get on top of their rent, utilities, to finally think about buying a home or starting a family or starting a business,” he said. “And by the way, when this happens, the whole economy is better off.”

Earlier this month, congressional Republicans introduced legislation that would eliminate the public service loan forgiveness program, which creates a pathway for workers in public service jobs such as medicine, education and the military to have their loans forgiven. In May, Sen. Mitt Romney of Utah and his colleagues introduced the Student Loan Accountability Act to stop the federal government from eliminating student loans ineligible for forgiveness under existing relief programs.  

After Biden announced his debt relief plan, Romney took to Twitter to describe it as an attempt to “bribe the voters.” He went on to say that, “Biden’s student loan forgiveness plan may win Democrats some votes, but it fuels inflation, foots taxpayers with other people’s financial obligations, is unfair to those who paid their own way and creates irresponsible expectations.”

During his press conference Wednesday, Biden said that debt relief will not harm the economy because last year the government cut the deficit by more than $350 billion and is on track to cut the deficit by more than $1.7 trillion by the end of this fiscal year. 

A slight majority of the public supports debt forgiveness. A July Economist/YouGov poll of 1,500 Americans found that 51 percent of people somewhat or strongly support the federal government canceling $10,000 in federal student loan debt for borrowers who owe at least that much, while 39 percent somewhat or strongly opposed the decision. Current borrowers show the strongest support for debt forgiveness, with more three quarters of this group backing the move. Forty-eight percent of people who already paid off their loans and 44 percent of people who never had student loans oppose debt forgiveness. Support is divided along party lines, with most Democrats supporting debt elimination and most Republicans opposing it. Just over half of independent voters support debt erasure. 

The Biden administration has already forgiven an unparalleled $32 billion in student debt for about 1.6 million borrowers, including those who attended for-profit colleges, work in the public service sector or have permanent disabilities. But as the COVID-19 pandemic roars on and housing and food costs remain high, student loan relief advocates have said that borrowers generally need their debt forgiven. Upon announcing the debt relief decision, the Biden administration said it will largely benefit middle and low-income Americans, countering remarks from Republicans such as Senate Minority Leader Mitch McConnell that the proposal is a win for the nation’s elite.

“No high-income individual or high-income household — in the top 5 percent of incomes — will benefit from this action,” the White House press office said in a statement about the plan. Excluding borrowers still in school, nearly 90 percent of relief will help those with annual incomes of less than $75,000. 

Supporters of debt forgiveness have said that slashing student loans will reinvigorate the economy by freeing up borrowers to spend their money on big purchases such as homes or cars. They also say that it will help end generational cycles of poverty among marginalized students who attended college in hopes of entering the middle class, only to be saddled with years of student debt. Maya Wiley, president and CEO of The Leadership Conference on Civil and Human Rights, said in a statement that student debt blocks Americans from achieving the American dream of prosperity. 

“For too many — especially borrowers of color and Black women — student debt makes it hard to get ahead and make ends meet,” she said. “It can also make it more difficult to get a home mortgage or loans to start a business, both of which reduce wealth-building opportunities and contributions to the economy.”

She tempered her praise for Biden’s relief plan, calling on the White House to cancel a larger portion of student loans, make the process of obtaining relief easy and take additional measures to reform the student loan system.

“This is an important first step,” she said. “But borrowers should not have to wait any longer for a reprieve.”  

Moreira said Biden’s debt relief plan is “bittersweet.” While she’s grateful that it will eliminate her student debt, she knows that many people will continue to have debt they can’t afford. 

“I’m very appreciative,” she said. “I will definitely not put down the little bit that is being done at the moment to forgive these loans, but I believe that there’s more that can be done. … I feel like if you want to do justice and if you want to create a better environment and a better country … more needs to be done. $10,000 is not enough.”