Tens of millions of Americans will have up to $20,000 in federal student loan debt forgiven by President Biden, a move that would offer borrowers unprecedented relief but is guaranteed to face legal challenges and political backlash.

The president said Wednesday that he will forgive $10,000 in federal student loan debt for borrowers earning less than $125,000 annually or couples earning less than $250,000 annually. This decision follows more than a year of internal deliberation. Additionally, according to Mr Biden, people who get federal Pell Grants and earn less than $125,000 annually are qualified for a total of $20,000 forgiveness.

At the White House, Mr Biden stated that “an entire generation is now saddled with unsustainable debt” and added that he wouldn’t apologise for what he called a programme to benefit the middle class.

I realise that not everything of what I’m announcing today will please everyone, he said. But I think my strategy is just and responsible.

The plan is expected to cost more than $300 billion over ten years, according to independent assessments. Although there is no immediate expenditure of federal cash, the action will eventually increase the deficit because borrowers will repay less or none of their loans to the federal government.

According to White House officials, forgiveness is available to students with federal loans from undergraduate and graduate schools as well as Parent Plus loans. The cancelled student debt will be excluded, similar to certain other federal student debt forgiveness schemes, even though debt cancellation is sometimes classified as income for tax reasons. Borrowers who took out federal loans by June 30 of this year are eligible for forgiveness, according to the White House. After that date, loans won’t be eligible.

Additionally, Mr Biden declared that the temporary freeze on student loan payments would continue through the end of this year. For millions of borrowers, loan payments were scheduled to start up again after August 31. Before the repayment pause ends at the end of the year, the Education Department will make an application available and provide further information on how borrowers can apply for relief in the coming weeks. The department estimated that eight million debtors may qualify for automatic assistance because it already had information on their income.

The plan is expected to cost more than $300 billion over ten years, according to independent assessments. Although there is no immediate expenditure of federal cash, the action will eventually increase the deficit because borrowers will repay less or none of their loans to the federal government.

According to White House officials, forgiveness is available to students with federal loans from undergraduate and graduate schools as well as Parent Plus loans. The cancelled student debt will be excluded, similar to certain other federal student debt forgiveness schemes, even though debt cancellation is sometimes classified as income for tax reasons. Borrowers who took out federal loans by June 30 of this year are eligible for forgiveness, according to the White House. After that date, loans won’t be eligible.

Additionally, Mr Biden declared that the temporary freeze on student loan payments would continue through the end of this year. For millions of borrowers, loan payments were scheduled to start up again after August 31. Before the repayment pause ends at the end of the year, the Education Department will make an application available and provide further information on how borrowers can apply for relief in the coming weeks. The department estimated that eight million debtors may qualify for automatic assistance because it already had information on their income.