President Biden Announces Part of Promised Plan for Student Loan Forgiveness
Earlier today, August 24th, President Joe Biden made the announcement that he would be cancelling some student loan debts for qualifying Americans. This coincides with a Tweet that Biden sent out while campaigning to be become to be President in March of 2020.
To qualify for the partial forgiveness individual borrowers must earn less than $125,000 a year to qualify and married or head of households must earn less than $250,000. Also, depending on if Pell Grants were accepted by borrowers could result in up-to $10,000 relief to non-Pell Grant recipients or up-to $20,000 to Pell Grant recipients in loan forgiveness. Along with partial loan forgiveness the student loan repayment pause has been extended one final time until December 31st 2022, according to President Biden. The loan forgiveness will also affect federal loans and not private loans.
The partial relief will not be taxable income and will not be eligible to claim on Federal Income Taxes. The Biden-Harris Administration is proposing a new income driven repayment plan that would have borrowers paying 5% of their income instead of 10% that the current payment plan has set in place. Instead of 20 years for loan balances to be forgiven it seems that the new set amount of time could be 10 years if the loan balance is less than $12,000. The Biden-Harris Administration is also seeking to cover borrowers unpaid monthly interest and prevent any loan interest from accruing as long as payments are made on time.
A modification that was made for people with student debt that may be eligible for the Public Service Loan Forgiveness Program at the beginning of the pandemic is about to expire within the next few months. October 31st 2022 is the cutoff date for people who work in local, state, federal, tribal government or a non-profit organization to apply for loan forgiveness or credit towards their loan forgiveness even if they have not made 120 payments while working full time.
Currently there is no way to sign up for the partial forgiveness but the Department of Education will be setting up an application that people will be able to access online. The application will be available online before December this year and the Department of Education has set up a notification alert that can be signed up for online.