President Biden on Wednesday announced a sweeping new student loan forgiveness initiative that will provide billions of dollars in student debt relief to millions of borrowers. According to Education Department officials, up to 20 million borrowers can completely eliminate their student loan debt under the initiative.
“Today we are providing targeted relief that will help ensure borrowers are not financially worse off as a result of the pandemic and restore confidence in a system that should create opportunity, not a debt trap,” Education Minister Miguel Cardona said in a statement.
Here are the key details on who qualifies and how to apply for relief.
$10,000 or $20,000 in student loan forgiveness
Biden’s plan calls for student loan forgiveness of up to $10,000 or $20,000. The difference in eligibility levels depends on whether the borrower received Pell Grants, a type of government student grant for lower-income borrowers that does not have to be repaid. Borrowers who have not received Pell Grants can receive up to $10,000 in student loan forgiveness, while borrowers who have received Pell Grants can receive up to $20,000 in student loan forgiveness.
For both levels of loan forgiveness, borrowers must earn less than $125,000 per year in income, or $250,000 per year if married.
Student loan forgiveness is available for all federal student loans held by the government, including federal undergraduate student loans, federal graduate student loans, and Parent PLUS loans held by the government.
Some student loans are granted automatically
The Biden administration has indicated that the Department of Education will be able to automatically provide at least some of the relief without requiring borrowers to take any action. This primarily includes borrowers who have already filed their income information with the department, e.g. B. Borrowers who have recently applied for or recertified an income-based repayment plan. The department can also determine which borrowers have received Pell grants.
The administration estimates that 8 million borrowers are eligible for this automatic relief and therefore do not need to take any action.
Some borrowers must apply for student loan forgiveness
The Department of Education advises that borrowers who have not provided their income information must complete and submit an application certifying their income. Borrowers who are unsure whether the department has up-to-date income information should make a mistake on the application submission page, according to published guidance.
The application for the Biden Student Loan Forgiveness Initiative is not yet available, but the Department of Education says it “will be available before the pause in federal student loan repayments ends on December 31.” As part of the Biden Student Loan Forgiveness Initiative, the ongoing pause in student loan payments has been extended through Dec. 31.
The administration offers borrowers the option to subscribe to a notification system that will notify borrowers as soon as the application is available. Here you can sign up.
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