The Biden administration announced its plan to cancel some of America’s $1.6 trillion in federal student loan debt, fulfilling a campaign promise after months of anticipation.
While that White House says 43 million borrowers can expect to receive aid — about 20 million people are expected to have their remaining federal student loan balances written off — meaning about 2 million borrowers will not receive aid.
It is possible that you are among those borrowers who will not see relief for some reason.
First, if your student loan is not a federal loan and is through a private lender, your loan will not be forgiven under President Biden’s plan. Private loans are not under the jurisdiction of the federal government, meaning the federal government is unlikely to be able to forgive them.
“Targeted student loan cancellations” unveiled Wednesday are intended to help “borrowers with the highest risk of delinquency or default when payments continue,” the Education Department said. release.
“No high-income individual or high-income household — in the top 5% of income — will benefit from this action,” the White House said Wednesday.
As expected, student loan forgiveness will be limited based on income. Borrowers “with an annual income during the pandemic below $125,000 (for individuals) or below $250,000 (for married couples or heads of household)” will receive relief of up to $10,000, according to the US Department of Education.
Borrowers under the same income caps who received a Pell Grant in college will be eligible for up to $20,000 in debt cancellation.
If your annual income exceeds the income threshold, you will not qualify for the relief outlined by the Biden administration.
How that freedom will be distributed is not yet clear.
In a release on Wednesday, the Department of Education said further details would be announced in the coming weeks. Applications must be submitted and, according to officials, they will be available before student loan payments end on December 31.
Income data already available to the Department for Education shows nearly 8 million borrowers could automatically receive student relief.
Additional details on the student loan forgiveness are expected in the coming weeks, and President Biden is scheduled to deliver remarks about the decision Wednesday afternoon.
In addition to student loan forgiveness, the Biden administration extended the loan repayment moratorium until the end of 2022, proposed new rule changes to create a new income-driven repayment plan that would reduce future monthly payments for low- and middle-income borrowers, and proposed changes to the term long into the Public Service Loan Forgiveness program.
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