Student debt forgiveness plan becomes reality

In his campaign, President Joe Biden promised Americans that he would provide relief for those crippled by student loan debt. Last week, he announced his student loan forgiveness plan, which could grant students with up to $20,000 in student loan forgiveness.
“I will never apologize for helping Americans working — working Americans and middle class, especially not to the same folks who voted for a $2 trillion tax cut that mainly benefitted the wealthiest Americans and the biggest corporations, that slowed the economy, didn’t do a hell of a lot for economic growth, and wasn’t paid for and racked up this enormous deficit,” Biden said in a press conference Aug. 25.
Current college students are among the list of people eligible for loan forgiveness; however, it only applies to those that have had their loans dispersed by June 30, 2022.
Anyone who has federal loans and makes less than $125,000 annually (or $250,000 per household) are eligible to receive up to $10,000 forgiven on their student loans. Students who have Pell grants, regardless of frequency or size, and meet those same requirements qualify for up to $20,000 forgiven, according to a fact sheet published by the White House Aug. 24. Your income will be based off income figures from either 2020 or 2022.
If your current loan balance is less than what you are eligible for in terms of relief, the amount forgiven will be capped at your current balance.
For students who are still dependents, those income figures are based off your parent’s income, not the individual income of the student.
Almost any type of federal student loan qualifies for forgiveness, including parent PLUS loans and graduate loans. However, private loans are not eligible.
The forgiveness program can also apply to loans that were used for something other than a bachelor’s degree. Those who used a federal loan for trade school, community college and professional degree.
Based on the income data the Department of Education currently has, debt forgiveness happens automatically. There is no need to apply. Those who do not have relevant income information on file however – say you graduated in the middle of a year and change to independent status- will have to fill out an application launched by the Department of Education in October. After that, it should only be a few weeks until loans are forgiven.
Along with loan forgiveness, Biden announced that the pause on student loan payments was extended to Dec. 31. After that, Americans are expected to pay their loans back regularly.
According to a Forbes article published Tuesday, there is not currently a plan to allow student debt forgiveness in the future.