President Joe Biden could announce $10,000 in student loan forgiveness from this Wednesday.
Here’s what you need to know — and what it means for your student loans.
After more than two years of waiting, Biden could enact a large-scale $10,000 student loan forgiveness for more than 40 million student borrowers. According to CNN, the Biden administration may release details of historic student loan relief on Wednesday.
Student Loan Forgiveness: Who Qualifies
Who is eligible for this broad student loan forgiveness? If Biden follows a proposal from the U.S. Department of Education, all federal student loan borrowers will be eligible for a broad student loan forgiveness. Eligible borrowers would include those with Federal Direct Loans, FFELP Loans, Perkins Loans, Parent PLUS Loans and Grad PLUS Loans. Private loans would be excluded. The $10,000 student loan forgiveness could also include an income threshold of $125,000, meaning student borrowers who earn up to that amount would qualify. In recent weeks, the Biden administration has launched an income threshold of $150,000. However, the administration has already discussed the $125,000 income level this spring. Importantly, the decision is not final, which means Biden could change elements of this proposal. Biden has consistently supported $10,000 in student loan forgiveness since he ran for president in 2020. While Biden has called on Congress to forgive $10,000 in student loans, Congress has never passed of legislation. Republicans in Congress unveiled a blockbuster proposal on student loan forgiveness in response to Biden’s plan. Republicans oppose broad student loan forgiveness and end the student loan payment hiatus immediately.
No more student loan cancellations
Biden has forgiven $32 billion in student loans since becoming president. This includes targeted cancellation of student loans for public servants, borrowers with total and permanent disabilities, and borrowers whose student loans have been canceled under borrower’s defense until repayment. CNN also reports that Biden may additionally consider more targeted student loan forgiveness for specific groups of student borrowers. Congressional progressives such as Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) continue to defend $50,000 in student loan forgiveness, which the president has not publicly supported. Biden also offered to give defaulting student borrowers a “fresh start” with their student loans.
Student loan payment break: what to expect
Student loan forgiveness isn’t the only major decision Biden could make this week. The student loan payment pause ends on August 31, so in the absence of an extension, federal student loan payments resume on September 1. Biden is considering whether to extend the student loan moratorium for the seventh time. If Bidens extends the student loan payment break, here’s what to expect. US Education Secretary Miguel Cardona said Biden would decide this week whether to extend the suspension of student loan payments. As a result, student borrowers will know “soon” if their student loans will be canceled and federal student loan repayments will be delayed again. Whatever the president decides, remember that these policies may not erase all of your student loan debt. Therefore, you need a clear plan for student loan repayment. Here are some great ways to save money and pay off student loans faster: