President Joe Biden announced Wednesday that his administration will forgive up to $20,000 worth of student loan debt for borrowers who received Pell Grants.
People who didn't receive a Pell Grant are eligible for up to $10,000 in loan forgiveness, the president said on Twitter.
The government will only cancel debt for people making less than $125,000 a year.
In addition to canceling student loan debt, Biden will extend the repayment pause until Dec. 31. He said this will be the last extension of the pause, which began due to the pandemic.
Biden's plan will also allow people with undergraduate loans to cap their repayment at 5% of their monthly income.
It's still unclear how the plan will be implemented. Biden is expected to make a formal announcement Wednesday afternoon.
Approximately 43 million Americans have federal student loan debt, which totals $1.6 trillion.