US President Biden announces debt relief for university graduates

US President Joe Biden on Wednesday announced a relief of $10,000 for US university graduates still trying to pay off student loans. Educational debt has been a massive issue in the country for decades. "In keeping with my campaign promise, my administration is announcing a plan to give working and middle class families breathing room," Biden said in a statement.

The announcement comes less than three months before mid-term congressional elections, where the issue is seen as a vote winner for Democrats, AFP reported.

Under the relief plan, those who earn a salary of less than $125,000 will get a relief of $10,000. For former students who went to university with need-based government assistance known as Pell grants, the relief will be $20,000.

Federal data suggests that over 43 million people have federal student debt, with an average balance of $37,667. The announcement is expected to wipe off student loans of around 20 million people.

US college fees ranges between $10,000 and $70,000 a year, leaving graduates with a huge debt. According to government estimates, the average debt for US college students when they graduate is $25,000 and most of them continue to repay it for years, even decades.

Even though Biden's announcement is a welcome step, the proposed debt relief falls far short of some Democrats' goal of securing complete forgiveness. Meanwhile, Republicans have opposed any such move arguing that shaving any amount from graduates' loans is unfair to those who have spent years saving to pay off their own debts.

White House estimates say that in total, some 45 million borrowers nationwide owe a collective $1.6 trillion.

Biden is also extending a pause on federal student loan payments through the end of 2022. He will unveil the proposal to the public at the White House on Wednesday.

"With the flick of a pen, President Biden has taken a giant step forward in addressing the student debt crisis by cancelling significant amounts of student debt for millions of borrowers. The positive impacts of this move will be felt by families across the country, particularly in minority communities," said a joint statement by Schumer and leading liberal Senator Elizabeth Warren.

(With inputs from agencies)