What is Biden’s Student Loan Forgiveness Plan and who all qualifies?

For millions of Americans, president Biden’s new student plan will turn out to be a game changer. According to reports, about one third of all American students are under federal debt taken for higher education, which in total is more than $1.6 trillion.

President Joe Biden, joined by Education Secretary Miguel Cardona announced on wednesday  that  fulfilling his campaign promise, administration would cancel $10,000 for most borrowers with an annual income below $125,000 and $20,000 in relief for one qualified for federal Pell grants. However, the dilemma still continues with who all will be qualified, what will be the process and does it also include the early freezed payments ?

What is Joe Biden’s Student Loan Plan?

The 46th President of the United States, keeping his campaign pledge, has announced a student loan debt relief program. Under this program, the administration will forgive a big chunk of amount for certain lower-income borrowers and will also bring a 29-month pause on loan repayments to an end. 

In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023.

I'll have more details this afternoon. pic.twitter.com/kuZNqoMe4I

— President Biden (@POTUS) August 24, 2022

The relief program mentions that 95% of borrowers will receive benefits from the plans. Out of which 60% of the borrowers are Pell Grant recipients. According to reports, White House is forgiving $20,000 for individuals who qualified for Pell Grant, whereas borrowers who did not qualify for Pell grants will receive only $10,000 in relief.

Who all will qualify for Biden’s Loan Plan?

Details are yet to be announced, but only people making less than $125,000 a year are expected to qualify. People who borrowed through most federal student loan programs are likely to be eligible, while those who have private loans issued by banks or schools probably won’t be.

Importantly, all the borrowers should have an individual income of $125,000 or $250,000 as  household income to be entitled to loan relief. Students who took debt through most of federal student loan programs are only eligible other than those who brought loans from private banks or schools.

Experts say, The White House decision to comfort debt of  $10,000 will cost the federal government around $244 billion. Whereas, the $20,000 relief for Pell Grant recipients may add around $120 billion additional to the government’s costs.

Biden during the conference at White House said that The Department of Education will release a ‘short and simple; form for borrowers to apply for the relief in coming weeks.

What are the benefits of Joe Biden’s new student loan program?

“Education is a ticket to a better life but over time that ticket has become too expensive for too many Americans,” Biden said during the new student loan plan. He further continued that his plan is not just to cut off the debt but also to turn the whole process smoother and manageable for current and future student borrowers. 

It is expected that Biden’s new student loan policy will help users in numerous ways like: 

• Granting relief to a maximum of 43 million borrowers, along with complete cancellation for around 20 million borrowers.
• The program will focus mostly on marginalized borrowers in terms of income. Also, the Department of Education as per its data will release relief to almost 90% of students who are not in the school.   
• The benefits of loan forgiveness will be equally divided between students without discrimination on grounds of colour, age or race.
• Targeting Pell Grant recipients for relief will also help to bridge racial wealth gaps. As the number of black student borrowers are more in comparison to white, so this program in some way will help to advance the racial equity.
• On top, the debt relief plan will not be treated as taxable income for the federal income tax purposes

Simultaneously, the Department of Education is focussing on developing new plans and actions to hold account on colleges who made contributions to the student debt crises. As this may result in strengthening of President's new student loan relief plan.