Biden’s $10,000 student-loan-debt relief plan could mean 15 million borrowers owe nothing

Biden’s student loan forgiveness plan being announced Wednesday will also cancel $20,000 in debt for Pell grant recipients

More than 15 million Americans may find themselves debt-free — at least in terms of their federal student loans — with President Joe Biden’s expected announcement that the government will forgive $10,000 of the money that’s owed, as well as $20,000 for Pell grant recipients.

That’s a MarketWatch estimate based on various studies on the overall student-debt picture.

According to the Student Loan Hero website, 45.4 million Americans have federal student-loan debt. A recent analysis by the Washington Post showed that 33% of borrowers owed less than $10,000. In rough terms, that means at least 15 million Americans could have their debt erased if Biden’s widely reported plan takes effect.

There are caveats, however. The Biden plan is expected to provide debt relief only to those earning less than $125,000. And the relief will likely only apply to those with federal student loans, not private loans.

Plus, plenty of borrowers owe more than $10,000. Indeed, the Washington Post analysis found that 20% of borrowers have $10,000 to $20,000 in debt, 21% have $20,000 to $40,000 in debt, 18% have $40,000 to $100,000 in debt and 7% have more than $100,000 in debt.

Still, some of those in the under-$10,000 group are already celebrating their potential debt-free status on social-media.

A recent Federal Reserve analysis showed that those with student-loan debt “reported lower levels of financial well-being” in general.