US President Joe Biden this week unveiled a plan that would eliminate $10,000 to $20,000 in student loan debt for borrowers across the country.
Mr. Biden said his long-awaited plan would “provide more breathing room” for people who are struggling to pay off their student loans. The White House estimates that 45 million borrowers have accumulated $1.6 trillion in debt.
The median 2020-2021 tuition at public four-year US universities was $9,400. That figure is over $37,000 a year for private nonprofits, according to the National Center for Education Statistics.
If the plan survives likely litigation, Biden said it could pay off 20 million people’s student debt.
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Who is eligible?
Singles with an income of less than $125,000 are eligible for $10,000 student loan debt elimination. Those who are married and have a joint income of less than $250,000 will also be eligible.
Eligibility is based on adjusted gross income and only federal student loan debt is eligible.
People who receive a Pell Grant and are below the income threshold will be eligible for student loan debt relief up to $20,000.
Pell grants, which are generally non-refundable, are for university students with the most significant financial need. About 27 million Pell grant recipients are eligible for loan forgiveness.
Students currently enrolled in universities will be eligible for debt relief if their loans were paid before July 1 and if their parents earn less than $250,000 a year. The plan does not apply to prospective university students.
How to apply?
Some people will not need to apply for student loan debt relief because the US Department of Education has income data for a small portion of borrowers. Others will need to verify their income during the application process.
The apps will be available before the end of the year, officials said.
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Updated: August 25, 2022 02:46 PM