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Washington — President Biden announced Wednesday he is forgiving up to $10,000 in federal student loan debt for millions of Americans and an additional $10,000 for low-income borrowers while extending a pause on monthly payments, delivering on long-awaited relief just weeks before the midterm elections.

Under the plan, which the president unveiled on Twitter, borrowers earning less than $125,000 a year, or couples earning less than $250,000 a year, would be eligible for up to $10,000 in loan forgiveness. Recipients of Pell Grants, which are given to students with the greatest financial need, would be eligible for another $10,000 in relief. Loan payments will also be capped at 5% of monthly income.

The president is also deferring student loan repayments until the end of the year, and the Education Department said it would be the last time the pause is extended. Mr. Biden is set to deliver remarks on Wednesday afternoon, the White House said.

“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,” the president tweeted.

The Education Department said it would unveil an application for borrowers seeking debt relief “in the coming weeks.” 

The move to forgive student debt follows months of internal White House deliberations over the feasibility and cost of doing so. Mr. Biden made student loan forgiveness one of his top priorities during his presidential campaign, and Democrats have pushed the administration to deliver on his promise. Republicans have said Mr. Biden does not have the authority to cancel the debt, and his plan is certain to face a barrage of legal challenges.

A Penn Wharton Budget Model analysis concluded that forgiving $10,000 of student loan debt for those earning up to $125,000 a year would cost nearly $300 billion in the first year. It also found more than two-thirds of the debt forgiveness would aid Americans in the top 60% of earners.

Millions of borrowers are expected to be eligible for relief under the plan. While more than 43 million borrowers carry federal student loan debt, according to Education Department data, the Federal Reserve says the majority have less than $25,000 in debt and a quarter owe less than $10,000.

Low-income Americans who never attended college and are struggling financially amid record-high inflation would not benefit from any debt cancellation, critics of student debt cancellation point out. Erasing some student loan debt would also not address the rising cost of college, which has historically outpaced inflation in recent decades.

The pause on student loan repayment began under the Trump administration at the onset of the pandemic, and Mr. Biden has paused student loan repayments a total of four times since he took office.

Steven Portnoy and Kristin Brown contributed to this report.