Student loan forgiveness: Biden cancels $10,000 in student debt for millions

US President Joe Biden will cancel up to $10,000 (£8,474) in federal student loans for millions of Americans who earn less than $125,000 each year.

Mr Biden will also forgive $20,000 of debt for students on Pell Grants, which applies to those in greatest financial need.

"People can finally crawl out under that mountain of debt," he said.

An estimated 43 million Americans owe a combined total of $1.6tn in federal student debt.

Nearly one-fifth owe less than $10,000.

The temporary student loan pause, first put in place in March 2020, will also be extended a final time until 31 December of this year.

Speaking from the White House on Wednesday, Mr Biden said his plan would give more "breathing room" to working and middle class families.

"The burden is so heavy that even if you graduate you may not have access to the middle class life that the college degree once provided," he said, recalling the shame his car salesman father felt when he struggled to pay for his children's education.

About one-third of borrowers have student debt but no degree, Mr Biden said. "The worst of both worlds."

The announcement follows more than a year of intense internal White House debate and mounting pressure from progressive Democrats. Top Democrats Senate Majority Leader Chuck Schumer of New York and Senator Elizabeth Warren of Massachusetts, are among those who had pushed Mr Biden to use his executive power to wipe out borrower debts.

Wednesday's plan falls short of the $50,000 per borrower plan that Mr Schumer and Ms Warren had asked for.

A one-time cancellation of $10,000 for each borrower earning a maximum of $125,000 will cost the federal government around$300bn, according to an estimate from the Penn Wharton budget model at the University of Pennsylvania.

Mr Biden addressed this criticism on Wednesday, saying his student forgiveness plan is the "economically responsible course".