Biden Student Loan Forgiveness Could Benefit Over 40 Million Americans; Here's What You Need To Know

More than 40 million Americans might have their student loan debt reduced - and in many cases erased - under President Joe Biden's amnesty plan, a historic but polarizing move towards the US midterm elections.

In a speech at the White House, President Biden said, "An entire generation is now saddled with unsustainable debt in exchange for an attempt, at least, at a college degree. The burden is so heavy, that even if you graduate, you may not have access to the middle-class life that the college degree once provided. Many people can't qualify for a mortgage to buy a home because of the debt they continue to carry."

The president said 43 million people would benefit from his student loan plan, with 20 million Americans having their student loans fully wiped out, per Politico.

"People can start to finally crawl out from under that mountain of debt to get on top of their rent and their utilities," he said. "To finally think about buying a home or starting a family or starting a business."

Joe Biden stated that his loan forgiveness program would help 43 million people, with 20 million Americans seeing their student loans completely wiped off.

Biden said he campaigned for the presidency to build the economy "from the bottom up and the middle out," saying that the measure will help the United States win the "economic competition of the 21st century."

The loan forgiveness program is the result of a deliberation that lasted more than a year, in which the president faced intense lobbying from both liberals who wanted broad debt forgiveness and moderates and conservatives who questioned its basic equality, according to AP News.

Though millions of borrowers will have unanswered questions, some facts will not be clear for weeks or months.

Here are some important questions and answers regarding the loan forgiveness program, as per a report from NPR.

Who will be entitled to loan forgiveness? Who is eligible?

Currently, Americans owe around $1.62 trillion in federal student loans. Biden's plan will bring assistance to the majority of them (43 million borrowers) and will fully eliminate student debt for around 20 million.

Individuals with federal student loans who earn less than $125,000 per year or couples earning less than $250,000 per year are eligible for up to $10,000 in loan forgiveness.

Borrowers who are dependent students will be eligible for relief based on their parent's income, including current students.

Under the president's plan, parent PLUS loans, which are federal loans for parents of undergraduate students, are also eligible. (Loans taken out beyond June 30, 2022, will not be eligible.)
Qualified Pell Grant recipients are eligible for up to $20,000 in additional aid.

According to the White House, over 60% of federal student loan borrowers got Pell Grants, which are designed to assist low-income students in paying for higher education. Approximately one-third of undergraduates with federal student loans receive them each year.

Should I apply?

White House noted that most borrowers will be required to complete an application to verify their income to benefit. According to the Education Department, approximately 8 million debtors currently have income information on file and should be eligible to have their loans immediately discharged.

For those 8 million borrowers, that relief may come very soon.Education Secretary Miguel Cardona noted that the department is improving "a system that was broken and antiquated" and It will take some time to get the procedure running smoothly.

Borrowers should go to https://studentaid.gov/debt-relief-announcement/ for more details and sign up for automated emails with updates, according to Cardona.

Will there be reductions in my monthly payments?

Surprisingly, Biden's statement includes a revamped plan for income-driven repayment (IDR), which is intended to assist people who cannot afford to make substantial monthly payments.

Biden's IDR plan will reduce the amount borrowers must give each month from 10% to 5% of their discretionary income. It will also increase the amount of non-discretionary income, hence allowing for additional aid.

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United States, Joe Biden, White House