President Joe Biden on Wednesday morning announced a plan for student debt forgiveness. The White House said that since 1980, the total cost of four-year public or private college has nearly tripled, and that the typical undergraduate college student with debt now graduates owing almost $25,000. Here’s what we know so far:
Q: Who’s eligible for student debt forgiveness?
A: Student debt holders making less than $125,000 in individual income, or less than $250,000 for married couples or heads of households. Also eligible are Pell Grant recipients with loans held by the U.S. Department of Education.
Q: How much can be forgiven?
A: Up to $10,000 for debt holders who did not receive Pell Grants but have loans held by the Education Department, and up to $20,000 for Pell Grant recipients with loans held by the Education Department.
Q: Why is it “up to” $10,000 or $20,000?
A: Debt relief is capped at the amount of debt, so someone eligible for $10,000 in relief who only owes $8,000 will have the $8,000 forgiven.
Q: What time period is the income requirement based on?
A: The Education Department said the program will apply to those who had qualifying income levels “during the pandemic.”
Q: How many people are expected to benefit?
A: The plan will “provide relief to up to 43 million borrowers” and cancel the full remaining debt for about 20 million, the White House said.
Q: Which income levels will benefit the most?
A: The White House said almost 90% of the debt relief will go to those making less than $75,000 per year.
Q: If I have student debt from private loans, will that debt be forgiven?
A: The Biden Administration announcements refer only to loans held by the U.S. Department of Education.
Q: When does the program start?
A: No later than the end of this year, according to the Education Department.
Q: How do I sign up for debt cancellation?
A: The Biden Administration estimates 20% of those eligible will automatically qualify because the Education Department already has their income information. Biden’s domestic policy advisor Susan Rice said in a press conference Wednesday afternoon that people can go to studentaid.gov and provide an email address, and they will be notified when an application form and income attestation is available.
Q: If I take out a federal student loan now, will I get debt cancelled?
A: No. The Biden Administration said Wednesday the loans must have been taken out by the end of June 2022.
Q: What does the Education Department say is the reason for the debt cancellation?
A: The department said the program will “address the financial harms of the pandemic by smoothing the transition back to repayment and helping borrowers at highest risk of delinquencies or default once payments resume.”
Q: What does Biden say about the plan?
A: Biden tweeted Wednesday morning that it would “give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023.”
Q: What are critics of the plan saying?
A: National Republican Congressional Committee spokesman Mike Berg said, “Democrats are forcing people who didn’t go to college to pay off student loans for those who were fortunate enough to go to college. It’s just wrong.”
Q: What does the Education Department say is the legal basis for this debt-forgiveness program?
A: The department said in a memo that the Higher Education Relief Opportunities for Students “HEROES” Act, enacted in the wake of the September 11, 2001 terror attacks, gives the U.S. Secretary of Education authority to provide relief from student loan requirements during wars or national emergencies such as the COVID pandemic, and that this program would address financial harms from the pandemic.
Q: What else was announced on student debt payments?
A: The White House tweeted that Biden extended the pause on federal student loan repayment a final time, to end Dec. 31.
