President Joe Biden (Photo by Drew Angerer/Getty Images)
President Joe Biden could announce $10,000 of student loan forgiveness as soon as this Wednesday.
Here’s what you need to know — and what it means for your student loans.
After more than two years of waiting, Biden could enact wide-scale student loan cancellation of $10,000 for more than 40 million student loan borrowers. According to CNN, the Biden administration could release the details of the historic student loan relief Wednesday.
Student loan forgiveness: who qualifies
Who qualifies for this broad student loan forgiveness? If Biden follows a U.S. Department of Education proposal, all federal student loan borrowers will qualify for broad student loan forgiveness. Eligible borrowers would include those with federal Direct Loans, FFELP Loans, Perkins Loans, Parent PLUS Loans and Grad PLUS Loans. Private loans would be excluded. The $10,000 of student loan forgiveness also could include an income threshold of $125,000, which means student loan borrowers who earn up to that amount would qualify. In recent weeks, the Biden administration floated a $150,000 income threshold. However, the administration previously discussed the $125,000 income level this spring. Importantly, the decision isn’t final, which means Biden could change elements of this proposal. Biden consistently has supported $10,000 of student loan cancellation since he ran for president in 2020. While Biden called on Congress to cancel $10,000 of student loans, Congress never passed any legislation. Republicans in Congress unveiled a blockbuster proposal on student loan forgiveness in response to Biden’s plan. Republicans oppose broad student loan forgiveness and end the student loan payment pause immediately.
More student loan cancellation
Biden has canceled $32 billion of student loans since becoming president. This includes targeted student loan forgiveness for public servants, borrowers with a total and permanent disability, and borrowers who got student loans canceled under borrower defense to repayment. CNN also reports that Biden could additionally consider more targeted student loan cancellation for specific groups of student loan borrowers. Progressives in Congress such as Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) continue to champion $50,000 of student loan forgiveness, which the president publicly hasn’t supported. Biden also proposed to give student loan borrowers in student loan default a “fresh start” with their student loans.
Student loan payment pause: what to expect
Student loan forgiveness isn’t the only major decision that Biden could make this week. The student loan payment pause ends on August 31, so absent an extension, student loan payments for federal student loans restart on September 1. Biden is mulling whether to extend the student loan moratorium for the seventh time. If Bidens extends the student loan payment pause, here’s what to expect. U.S. Secretary of Education Miguel Cardona said Biden would decide this week whether to extend the student loan payment pause. Therefore, student loan borrowers will know “soon” whether their student loans will get canceled and federal student loan payments will be delayed again. Regardless of the president’s decisions, remember that these policies may not erase all your student loan debt. Therefore, you need a clear plan for student loan repayment. Here are some great ways to save money and pay off student loans faster: