President Joe Biden announced on Wednesday that a new student loan relief plan that is aimed to help, as Biden stated, “those who need it the most” . Further into his official statement, there was a breakdown of who would be eligible for this relief, and how it would be allotted.
The Biden Administration has already cancelled nearly $32 billion, out of the $1.3 trillion, of the current outstanding student loan debt by expanding the current loan forgiveness programs to specific spectrums of students
In order to be eligible to receive this relief, you must first be holding a loan with the Department of Education and with the criteria that the individual makes less than $125,000 yearly, or married couples that make less than $250,000 combined will have up to $10,000 of their federal student loan debt forgiven. However, for those students who received a Pell Grant are eligible for up to $20,000 in debt forgiveness.
What steps do students need to take in order to receive this debt forgiveness? According to a Senior Administration Official, the application will be available by this October. After a borrower completes the application, they can then expect the student loan relief within four to six weeks, the official also said. Additionally, the FSA reported that 8 million borrowers may be eligible, due to the Department of Educations access to individual income information.
The Biden Administration also plans to propose a rule to create a new income-driven repayment plan. This repayment plan essentially enables borrowers to pay no more than 5% of their monthly income on their undergraduate loans. IDR plans generally allow borrowers to avoid loan default by lowering their monthly payments based on the size of their families and their overall income. These plans, and others being considered, have great potential to allow student borrowers to have ample time to breathe post-graduation.
This blog post is part of the CIMA Law Group blog. If you are located in Arizona and are seeking legal services, CIMA Law Group specializes in Immigration Law, Criminal Defense, Personal Injury, and Government Relations.
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