President Biden Announces Additional $9 Billion in Student Loan Forgiveness:
President Biden has approved an additional $9 billion in student loan forgiveness for 125,000 borrowers.
This comes after the Supreme Court struck down his plan to forgive $10,000 in student loans for each borrower.
The new forgiveness plan includes:
- $5.2 billion for 53,000 borrowers who are part of public service loan forgiveness schemes.
- $2.8 billion for 51,000 borrowers who have been paying their student loans for at least 20 years but have not yet received relief.
- $1.2 billion for borrowers with total or permanent disabilities.
President Biden says he believes that college should be a ticket to the middle class, not a burden that weighs on families.
He has taken steps to make college more affordable and to bring the promise of higher education in reach for more Americans.
Who qualifies for the new Student Loan Forgiveness?
To qualify for the new student loan forgiveness, you must meet one of the following criteria:
- Be part of a public service loan forgiveness scheme.
- Have been paying your student loans for at least 20 years but have not yet received relief.
- Have a total or permanent disability.
- How to apply for the new student loan forgiveness
The Department of Education will automatically apply the new student loan forgiveness to eligible borrowers. You do not need to take any action to apply.
When will the new Student Loan Forgiveness be applied?
The Department of Education will begin applying the new student loan forgiveness in the coming weeks.
The new student loan forgiveness is part of President Biden’s broader effort to make student loan payments more affordable and to help borrowers repay their loans.
He has also extended the student loan repayment pause several times and has signed legislation to make it easier for borrowers to qualify for public service loan forgiveness.
Public Service Loan Forgiveness (PSLF)
PSLF is a program that forgives the remaining balance of your federal student loans after you make 120 qualifying monthly payments while working full-time for a qualified public service employer.
Under the new forgiveness plan, the Department of Education will automatically count certain payments that were not previously eligible for PSLF, such as payments made on loans that were in default or forbearance.
This could help thousands of borrowers qualify for PSLF sooner.
Income-Driven Repayment (IDR)
IDR plans allow you to cap your monthly student loan payments at a certain percentage of your discretionary income.
After 20 or 25 years of making IDR payments, the remaining balance of your loan is forgiven.
Under the new forgiveness plan, the Department of Education will automatically correct IDR accounts so that borrowers receive credit for all of their eligible payments.
This could help borrowers qualify for forgiveness sooner or reduce the amount of debt that is forgiven.
Total and Permanent Disability (TPD) Discharge
If you have a TPD, you may be eligible to have your federal student loans discharged.
This means that the loans are forgiven and you are no longer responsible for repaying them.
Under the new forgiveness plan, the Department of Education will automatically review the accounts of borrowers who have applied for TPD discharge but have been denied.
This could help thousands of borrowers have their loans forgiven.
Impact on the economy
The impact of the new student loan forgiveness plan on the economy is likely to be mixed. On the one hand, it will provide relief to borrowers who are struggling to repay their loans.
This could lead to increased consumer spending and economic growth.
On the other hand, the cost of the forgiveness plan will be borne by taxpayers.
This could lead to higher taxes or cuts to other government programs.
Overall, economists believe that the impact of the new student loan forgiveness plan on the economy is likely to be small.
President Biden’s announcement of additional student loan forgiveness is welcome news for borrowers who are struggling to repay their loans.
The new forgiveness plan will help 125,000 borrowers reduce their debt burden by a total of $9 billion.
