How Biden's student loan forgiveness will affect Texans

Millions of Texans may be off the hook for some or all of their remaining student loan debt with the Biden administration's new plan to cancel up to $20,000 per borrower.

Catch up quick: President Joe Biden announced the cancellation of up to $10,000 in federal student loans for borrowers who make under $125,000 per year, with an additional $10,000 for Pell Grant recipients.

Why it matters: The decision is expected to alleviate some or all of the student debt burdens of 43 million Americans while also fulfilling a key campaign promise.

Zoom in: More than $121 billion is owed by 3.6 million Texans, an average of $33,000 per borrower, according to data from the Federal Student Aid Office.

• Texas residents ages 35-49 owe the most federal student loan debt at $49 billion, followed by 25- 34 year-olds at $37.9 billion.
• Meanwhile, about half of the graduates who went to a Texas college have student loans, averaging about $26,273.

Details: Approximately 20 million Americans could have their debt completely canceled under Biden's announcement, Axios' Sophia Cai and Erin Doherty report.

• Critically, the Biden administration is taking steps to make the student loan system more manageable for future borrowers.
• It will cap monthly payments at 5% of a borrower's monthly income and forgive loan balances after 10 years of payments for borrowers with loan balances of $12,000 or less, among other measures.
• The $10,000 in debt relief also applies to households that earn $250,000 a year or less.

What they're saying: Hyan Olvera, a 28-year-old professional wrestler, graduated early from the University of Houston with $27,000 in debt. She worked to pay her loans down to $15,000.

• As a Pell Grant recipient, the cancellation would make her debt free.
• "My husband and I want to buy a house. And that's kind of been, between the both of us, that was the biggest debt. I don't have to worry about paying that off. I can set that money aside that I was using to pay off my student loans towards a down payment."

Terrance Thomas, 32, is attending the University of Houston-Downtown to complete his bachelor's degree and will graduate this December. He has $57,000 in student loans.

• "There's some feeling of excitement, some partial relief. But also, there's another part where I really wish it was more … My mother made less than $30,000 a year. So when it was time to go to college, there was no family or no other external support outside of student loans and things of that nature. So for me, it was borrowing at a deficit."

Chris Jackson has $300,000 in private student loans for law school.

• "Even if I don't directly benefit, it's a good move to help people who need it."

Between the lines: Nationally, Black and African American graduates owe an average of $25,000 more in debt than their white peers, according to a 2022 Education Data Initiative report.

• They're also more likely to have higher monthly payments, with nearly one-third of borrowers making monthly payments of $350 or more.

What's next: The Department of Education lacks income data for most Americans with student debt, so most borrowers may have to apply — a process that could be lengthy.

Go deeper:

• Everything you need to know about Pell Grants
• Biden's student loan test
• Biden admin moves to fix "longstanding failures" in student loan programs
• Signs of reform for America's student debt