Student Loan Forgiveness: Over 40 million holders of student loans could soon have their loans forgiven by President Joe Biden.
According to President Biden, post-high school education should be a ticket to a middle-class lifestyle, but for far too many people, the expense of student loan debt prevents them from having that chance. He made a campaign promise to reduce student loan debt. Following through on that commitment, the Biden Administration is now giving families breathing room as they get ready to start repaying loans following the economic catastrophe brought on by the pandemic.
One of Biden’s most significant presidential decisions, whether to implement widespread student loan cancellation for millions of borrowers, will be made in the coming days. The president promised to make his decision regarding student loan forgiveness public before the student loan payment moratorium ends on August 31, 2022. Student loan borrowers should anticipate a response from Biden soon because there are only a few days left before the historic student loan relief program comes to an end.
Expectations for student loan forgiveness
Borrowers of student loans are unsure of what to anticipate from loan forgiveness. Notably, the White House has stated that Biden has not made up his mind about widespread student loan forgiveness. Biden might opt not to implement the cancellation of student loans for millions of students. Here is what to anticipate if Biden cancels student debts based on internal U.S. Department of Education papers about student loan forgiveness (which are subject to change):
- federal student loans are eligible for a $10,000 student loans cancellation;
- individual student loan debtors must earn no less than $150,000, while families must earn no less than $250,000; and
- For borrowers of student loans whose income is recorded with the U.S. Department of Education, student loan cancellation may occur as soon as 45 days after application.
- All federal student loans, including Direct Loans, FFELP Loans, Perkins Loans, Parent PLUS Loans, and Grad PLUS Loans, would be eligible for student loan relief.
Congress’s progressive Democrats continue to call for Biden to forgive $50,000 in student debt. Biden, though, has never promised to forgive student loans totaling more than $10,000. Having said that, these student loan debtors could be eligible for loan forgiveness.
How much forgiveness will they receive?
Whether the borrower obtained a Pell grant to pay for college affects the amount of debt that is forgiven. The Federal Student Aid office of the Department of Education states that a federal Pell grant is only given to undergraduate students who “display exceptional financial need and have not earned a bachelor’s, graduate, or professional degree” and “does not have to be repaid, except under certain circumstances.” Pell grants presently barely cover a third of the cost of a four-year public college degree, according to figures cited by the White House, which has boosted borrowing.
According to the FSA website, borrowers who did not get a Pell award as an undergraduate student and who make less than $125,000 annually as well as married couples or heads of households who make less than $250,000 annually may have up to $10,000 of their federal student loan debt erased.
Up to $20,000 of student loan debt will be forgiven for individuals who make less than $125,000 annually, married couples who make less than $250,000 annually, and heads of households who did receive a Pell award as undergraduate students.