President Joe Biden said Wednesday that many Americans can have up to $10,000 in federal student loan debt forgiven. That amount increases to $20,000 if they went to college on Pell grants. Here's what we know so far and what it means for people with outstanding student loans:
Who will qualify for the loan forgiveness?
The government announced that the loan forgiveness will be applicable to those who earn less than $125,000. Plus, people who borrowed the loan through federal student loan programs are likely to be eligible for it, but probably not those who have private loans issued by banks or schools
Administration plans to forgive up to $10,000 in federal student loan debt to those who are eligible. People who went to college on Pell grants, which are reserved for undergraduates with the most significant financial need, can have up to $20,000 forgiven.
As per federal data, about 43 million Americans have federal student debt, and a third of those owe less than $10,000. Half owe less than $20,000. The total amount of federal student debt is more than $1.6 trillion.
Nearly one third of all American students take out loans to pay for college, with an average balance of $37,667, according to federal data.
Will loan forgiveness be applicable to those who have already paid it?
No. The loan forgiveness will be only applicable to those who are currently holding student debt. But if you’ve voluntarily made payments since March 2020, when payments were paused, you can request a refund for those payments, according to the Federal Office of Student Aid. Contact your loan servicer to request a refund.
How does one apply for the loan foregiveness?
Details of that have not yet been announced, but keep an eye on the federal student aid website for more details in the coming days.
(With inputs from agencies)
