President Joe Biden announced his new Student Debt Forgiveness plan on Wednesday.

What’s new: Biden’s plan offers debt relief in the form of a three-part plan, providing aid to those recovering from the economic strain following the COVID-19 pandemic.

• The Department of Education will provide up to $20,000 in debt cancellations to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellations to non-Pell Grant recipients,” said an announcement from whitehouse.gov. 
• Individuals are eligible for this relief if their income is less than $125,000, or $250,000 for married couples. 
• “The Department of Education is proposing a new income-driven repayment plan that protects more low-income borrowers from making any payments and caps monthly payments at 5% of a borrower’s discretionary income,” said the White House report. 
• The plan also offers protection for future students by aiming to reduce the cost of college and hold schools accountable for heavy increases in their prices.

Current students would only be eligible for relief if their loans originated before July 1, 2022. 

Why it matters: This plan alleviates many financial worries for students, especially those facing low- or middle-class incomes.