Biden cancels up to $10K in federal student loans per person. Here's what that means for Texans.

President Joe Biden announced Wednesday that he would forgive up to $10,000 in federal student loans for people making $125,000 a year or less.

According to the U.S. Education Department, about 43 million Americans owe federal loans taken out for college, and the government’s decision to relieve up to $10,000 per person would wipe out all the debt for approximately a third of those people.

Biden also canceled up to $20,000 in student debt for Pell grant recipients and extended the nationwide pause on loan repayments for the final time through Dec. 31, providing economic relief to millions of Texans who have taken on a total of $120 billion in federal debt to pay for college.

People with undergraduate loans also will be able to cap repayment at 5% of their monthly income.

More:University of Texas relieves nearly $5 million in student debt

The federal government had suspended payments on most student loans, as well as interest and collections on defaulted loans, in March 2020 to address the financial strain of the COVID-19 pandemic, and the freeze has been continuously extended since then. It was set to expire on Aug. 31 before the final extension granted Wednesday.

“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,” Biden wrote on Twitter.

Here’s what you need to know about the plans for student loan relief:

Who qualifies to get debt relief?

The Education Department will provide up to $10,000 in federal debt cancellation for eligible borrowers and up to $20,000 in debt cancellation to Pell grant recipients with federal loans. People are eligible if their individual income is less than $125,000 or $250,000 for married couples.

How can people apply to get $10,000 in student debt relief?

The federal government is still working on setting up the application process for people to claim relief, but officials expect the process will be finished before the pause on federal student loan repayments expires at the end of the year. According to the White House, nearly 8 million people may receive relief automatically because the Education Department already has their income data.

How many Texans will this help?

The decision to forgive up to $10,000 in student debt will help more than 3.6 million Texans with such loans, including nearly 17% of whom owe less than $5,000, according to data from the Education Data Initiative. Biden's action will especially provide relief to Texans of color, who owe a disproportionate amount of student debt per person compared with white students.

According to a report last year by the Texas Higher Education Coordinating Board, about 37% of students enrolled in Texas colleges or universities owed student loans, and 58% of students in their fourth year of pursuing a bachelor’s degree owed loans during the 2019-20 academic year, with an average of $23,584 in debt.

The Texas Higher Education Coordinating Board reports that Black college students carried the highest average of total student debt by their fourth year of university compared with all other demographics, carrying an average of $27,539 in debt. The average amount of debt was $24,904 for white students, $20,527 for Hispanic students and $18,573 for Asian students.

How do Central Texans feel about the announcement?

Multiple Central Texans or people who graduated from colleges in the Austin area told the American-Statesman that they’re largely grateful for the forgiveness and continued pause on repayments, although some had hoped that Biden would have implemented greater debt relief or even cancel all student debt.

Stephanie Garcia, who graduated from Texas State University in May, said she has more than $50,000 in loans and was excited about the announcement but wishes Biden had canceled more debt.

“I think it’s incredible, and it will be a huge, huge help for my family. Not even just for me, but my mom has $13,000 in student loans after changing her career not too long ago, and that's going to be a huge relief to her,” Garcia said. “School is really expensive, and so having student debt being addressed right now, I think it's a really positive thing.”

More:Texas State University reports 14% increase in freshman enrollment

Jada Hatcher, a social work graduate student at the University of Texas, said she has about $40,000 in student debt, which she doesn’t have to begin repaying until she graduates. However, even with the relief from Biden, she’s not sure if it is going to be possible for her to repay it back in her lifetime.

Hatcher said she feels like the plan from Biden is a "Band-Aid" for addressing student debt, and she hopes that he considers a more comprehensive plan to the student loan crisis, such as canceling student debt nationwide or people’s interest on loans.

“I hope that the loans will be eradicated in their entirety, because I think it would be a huge societal shift,” Hatcher said. “Canceling student loan debt would essentially make me free to make a lot of choices in almost every aspect of my life that I can’t do now because I have to consider that debt.

This article originally appeared on Austin American-Statesman: How Texans will benefit from federal student loan forgiveness