President Joe Biden speaks about student loan debt forgiveness in the Roosevelt Room of the White House, Wednesday, Aug. 24, 2022, in Washington. (AP Photo/Evan Vucci)

The Biden administration on Wednesday announced it was canceling up to $10,000 of student debt for millions of people and up to $20,000 of debt for low- and middle-income borrowers who previously received a Pell Grant.

The loan relief will be limited to borrowers who earn less than $125,000 a year or families earning less than $250,000. In addition, the White House plans to extend the moratorium on monthly payments and interest for a “final time” through Dec. 31.

In a speech at the White House on Wednesday, Biden talked about the rising cost of attending college in the U.S., and the overwhelming burden this places on low- and middle-income Americans.

“An entire generation is now saddled with unsustainable debt in exchange for an attempt, at least, at a college degree,” Biden said. “The burden is so heavy, even if you graduate, you may not have access to the middle-class life that the college degree once provided. Many people can’t qualify for a mortgage to buy a home because of the debt they continue to carry.”

The president said 43 million people would benefit from his student loan plan, with 20 million Americans having their student loans fully wiped out.

“People can start to finally crawl out from under that mountain of debt to get on top of their rent and their utilities,” he said. “To finally think about buying a home or starting a family or starting a business.”

Biden said he ran for president “to grow the economy from the bottom up and the middle out,” arguing that Wednesday’s announcement would help the U.S. win the “economic competition of the 21st century.”

On a call with reporters, administration officials said the combination of forgiveness and restarting payments in January would “largely offset” each other, a rebuttal to criticism that the key elements of the plans would increase inflation.

“It has a negative fiscal impulse, collecting more payments from borrowers. And one step that has positive fiscal impulse — offering debt relief to borrowers most in need,” one of the officials said. “There are certain conditions and assumptions under which it could well be neutral or deflationary.”

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