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President Biden unveiled a student debt relief plan that provides a one-time student loan debt cancellation which targets low and middle-income families.
The U.S. Department of Education will provide up to $10,000 in debt relief to non-Pell Grant recipients and up to $20,000 for Pell Grant recipients. Borrowers making less than $125,000 per year (single) or less than $250,000 per year (married or head of household) are eligible for relief.
The plan also extends the moratorium on federal student loan payment through December 31, 2002. A new rule was also proposed to create a new income-driven repayment plan to reduce future payment for lower and middle-income borrowers.
The DOE provided more information about the one-time student loan debt relief including FAQs. Almost 8 million borrowers are eligible to receive student loan debt relief automatically because their income data is readily available to the DOE. If the DOE doesn’t have an individual’s data, they can complete a loan forgiveness application, which will be available online by early October 2022. All eligible borrowers are encouraged to apply. Once the application is completed, borrowers should receive debt relief within 4-6 weeks. Applications must be submitted by December 31, 2023.
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Additional Resource
Student Loan Forgiveness Plan Infographic
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