White House will forgive $20,000 of student loan debt for Pell Grant recipients

President Joe Biden announced Wednesday that Pell Grant recipients will have up to $20,000 of their federal student loans forgiven. 

The announcement came at the same time Biden announced his administration will forgive $10,000 in federal student loan debt for those earning under $125,000. The income cap also applies to Pell Grant forgiveness. The president is expected to give more details on the forgiveness efforts this afternoon.

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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.

I'll have more details this afternoon. pic.twitter.com/kuZNqoMe4I

— President Biden (@POTUS) August 24, 2022

This additional forgiveness amount is specific to people who were awarded a Federal Pell Grant as a part of their financial aid award. This federal grant was created to help students who show exceptional need for financial aid, as determined by the student’s Free Application for Federal Student Aid. 

Around 27 million borrowers would be eligible for $20,000 in forgiveness, the Department of Education estimates.

“Nearly every Pell Grant recipient came from a family that made less than $60,000 a year, and Pell Grant recipients typically experience more challenges repaying their debt than other borrowers,” the White House noted in a release.

The Pell Grant program traditionally is the largest source of federally funded grants, and the maximum grant award for the 2020–21 school year was $6,345.

The fund is designed to assist low- to moderate-income households in affording a college education. By expanding access, the Pell Grant helps narrow the education gap between income levels, which boosts college enrollment, reduces drop-out rates, and improves student career outcomes overall. 

“It’s sort of in-line with the idea that forgiveness should be targeted at those who need it the most,” says Jacob Channel, economist and student debt expert at Student Loan Hero. “It could help assuage some criticism that this is just a handout to the wealthy and people who don’t need forgiveness anyway.”

This forgiveness amount of $20,000 for Pell Grant recipients would not be in addition to the $10,000 student debt forgiveness for other borrowers.

This is a developing story. Please check back later for more details.