Biden’s student loan forgiveness plan and what it means
FARGO, N.D. (Valley News Live) - Last Friday, the Biden administration announced a three-part plan for student loan borrowers giving them the opportunity to apply for debt cancellation.
The first part of the plan will be the final extension of the student loan repayment pause. Those repayments have been on pause due to the pandemic and now people will have to begin paying in January 2023.
Part two includes the student loan forgiveness which means borrowers will have up to $20,000 worth of debt cancellation depending on their qualifications.
Those qualifications include cancellation up to $10,000 in Federal Student Loan debt for borrowers who earn less than $125,000 a year, or less than $250,000 for married couples.
But, those who received Pell Grants could get up to $20,000 of debt cancellation.
White House National Economic Council Deputy Bharat Rammamurti said the Education Department will release the application in early October.
After submitting and qualifying, borrowers should expect to have their loans reduced or in some cases fully erased in around a month.
You will have until December 31, 2023 to apply.
Part three is a rule to create a new repayment plan that will reduce future monthly payments for some. This includes requiring a payment of no more than 5% of a students monthly income, forgive loan balances after 10 years of payments instead of the original 20 years, and cover the unpaid monthly interest.
To learn more you can visit the White House website.
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