Here are the details on the US Department of Education’s potential plan for historic student loan forgiveness.
Here’s what you need to know — and what it means for your student loans,
After years of waiting for student loan forgiveness, student loan borrowers got a detailed look at the potential blockbuster plan for student loan cancellation. According to leaked documents from the Education Department, as Politico reported, millions of student loan borrowers could get more student loan relief sooner rather than later. While the proposal is subject to change, President Joe Biden must approve any student loan forgiveness. Here are 3 big things included in this plan for student loan cancellation:
1. $10,000 of student loan forgiveness
The plan would include $10,000 of student loan forgiveness for student loan borrowers. Since he was a presidential candidate, Biden has consistently supported $10,000 of student loan cancellation. However, Biden called on Congress to cancel student loans. Since Congress didn’t pass legislation, Biden is considering using executive authority or rulemaking at the US Department of Education to implement historic student loan relief. Progressive members of Congress, including Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) have championed $50,000 of student loan cancellation. That said, the president seems focused on $10,000 of student loan relief.
2. All federal student loans would qualify for student loan forgiveness
All federal student loans would be eligible for student loan forgiveness. This is a major change from previous student loan forgiveness. How? Previously, student loan forgiveness was limited to Direct Loans. When Congress passed historic student loan relief in March 2020, FFELP Loans and Perkins Loans, for example, weren’t eligible for student loan forgiveness. If Biden approves this plan, FFELP Loans, Perkins Loans, Parent PLUS Loans and Grad PLUS Loans would be included in student loan forgiveness. This significant expansion of student loan relief would benefit millions of student loan borrowers.
3. Income threshold would limit student loan forgiveness
While not finalized, this plan for student loan forgiveness includes an income threshold of $150,000 for individual student loan borrowers and $250,000 for families. If your income is below these thresholds, you qualify for wide-scale student loan forgiveness. If the Education Department already has your income, then student loan forgiveness could be automatic. If not, student loan borrowers could be allowed to self-report their income online to get their student loans canceled.
Student loans: next steps
What are the next steps for student loan cancellation? Biden must approve any plan for student loan forgiveness, which is subject to change. Importantly, the Education Department has said no decisions have been made on student loan forgiveness and that liberations are ongoing. Similarly, Biden said he will announce his decision on student loan forgiveness by August 31, when the student loan payment pause expires.
Credit: www.forbes.com /