Explainer: Biden’s Student Loan Forgiveness Plan
On Aug 30, 2022, President Biden released his plan to relieve student loans for millions of borrowers, providing up to $20,000 in relief per individual.
Here’s what you need to know:
Who is eligible?
Individuals who make less than $125,000 a year or married couples/heads of households who make less than $250,000 can have up to $10,000 in their student loan debt forgiven. Pell grant recipients will receive up to $20,000 in forgiveness.
What do I need to do to receive student loan forgiveness?
Millions of borrowers may be eligible for automatic forgiveness because of income data stored at the Department of Education.
However, the Department of Education is expected to open up the student loan forgiveness application sometime in October for people whose income data is not available. Once it opens, borrowers can apply for forgiveness.
Check back to Desifacts.org for updates.
What is the Public Service Forgiveness Program and what limited time changes should you be aware of?
The Public Service Forgiveness Program (PSLF) forgives loans of borrowers who work in public service (qualifying non-profits; federal, state, Tribe, and local governments; military) and have made 120 payments to their student loans.
Until Oct 31, 2022, temporary changes to the program allow borrowers to receive credit for past non-qualifying payments. Learn more about the Program and if you’re eligible for credit here.
Other changes to note:
Borrowers on income-driven payment plans only have to pay 5% of their monthly discretionary income now, compared to 10% previously.
Raising the amount of income that is considered non-discretionary income and protected from repayment.
Forgive loan balances after 10 years for borrowers with loan balances below $12,000.
Cover the borrower’s unpaid monthly interest as long as monthly payments are made.
Update:
The Student Loan Debt Forgiveness Application was recently opened on Monday, October 17th. You must apply for forgiveness before December 31, 2022. Apply today to receive forgiveness.
Sources and Read More:
Federal Student Aid Office. The Biden-Harris Administration's Student Debt Relief Plan Explained.
Katie Lobosco. CNN. Everything you need to know about Biden's student loan forgiveness program. 6 September 2022.
White House. Public Service Loan Forgiveness.
