WASHINGTON, DC – AUGUST 9: U.S. President Joe Biden attends a signing ceremony for the CHIPS and … [+] Science Act of 2022 on the South Lawn of the White House on August 9, 2022 in Washington, DC. (Photo by Chip Somodevilla/Getty Images)
Getty Images
President Biden on Wednesday made a long-awaited announcement to enact wide-scale student loan forgiveness. Biden also indicated he would extend the ongoing student loan pause once more. Millions of student loan borrowers will benefit from these initiatives.
Biden will be issuing further details later this afternoon. Here are the details so far.
Biden Announces Up To $20,000 in Broad Student Loan Forgiveness
Biden announced that he will be using executive action to implement a broad student loan forgiveness initiative that will wipe out $src0,000 in federal student loan debt for borrowers earning less than $src25,000 per year (or $250,000 per year if they are married). No comparable student debt cancellation program has ever been enacted before.
$src0,000 in student loan forgiveness for most borrowers would eliminate the student debt for src6 million borrowers, according to the Center for American Progress. Nearly one in three student loan borrowers would have their student debt completely wiped out through this initiative.
Biden’s announcement also includes additional relief for Pell Grant recipients. Pell Grants are a form of federal financial aid, issued to lower-income students, that does not have to be repaid. Federal student loan borrowers who earn below $src25,000 per year (or $250,000 per year if they are married) and who received Pell Grants as part of their financial aid package could get up to $20,000 in federal student loan forgiveness.
“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,” said President Biden in a tweet on Wednesday. He said further details would be released later today.
“I’m proud of [Education Secretary Miguel Cardona] and [President Biden] for today’s unprecedented step to make 43 million people eligible for debt relief, including 20 million whose debts would be completely wiped out,” said Undersecretary of Education James Kvaal in a tweet.
Biden supported wide-scale student loan cancellation during his 2020 presidential campaign, saying that he would endorse a plan to enact $src0,000 in student loan forgiveness for every borrower. Biden also campaigned on a promise to wipe out the undergraduate tuition-based federal student loan debt for borrowers who attended a public university or HBCU.
But since he took office, Biden has been reluctant to use executive action to fulfill his promises, and he questioned whether he had the legal authority to do so. White House officials repeatedly punted to Congress, indicating that Biden would sign a student loan forgiveness bill if one were passed.
When it became apparent that no such bill was forthcoming, Biden began to express more openness to using executive action to cancel student debt. But he continued to resist calls to forgive $50,000 or more in student loan debt, as progressive activists and some Democrats in Congress had called on him to do. Biden settled on a smaller figure, coupled with income restrictions, after over src8 months of debate.
Biden Extends Student Loan Pause to End of Year
In addition to enacting wide-scale student loan forgivness, Biden also announced that he will be extending the ongoing student loan pause to December 3src. The pause, which has suspended all payments and interest accrual on government-held federal student loans since March 2020, had been set to end on August 3src. This may be the final extension of the pause, according to the White House.
The Biden administration has been roundly criticized by student loan borrower advocacy groups and student loan servicers for waiting until the last minute to grant an extension. No prior extension of the student loan pause was issued with so little time remaining.
Still, an extension of the student loan pause was widely expected, as Education Department officials have been promising borrowers plenty of advance notice when payments are set to resume. Borrowers and servicers would now have this advance notice, with payments now set to resume in January.
The Biden administration will also soon be releasing details on a new income-driven repayment plan that will cut payments for undergraduate federal student loan borrowers by 50% or more compared to existing plans.
How To Apply for Biden’s New Student Loan Relief
While the student loan pause extension will be implemented automatically, the application process for Biden’s new student loan forgiveness initiative is less clear.
The Education Department has reportedly established procedures to implement at least a portion of the loan forgiveness automatically, if it has the means to do so. For example, the Department may have current income information on file from borrowers who recently applied for income-driven repayment plans. The Department also can identify Pell Grant recipients through its Federal Student Aid database. For other borrowers, an application will be required, and further details should be released soon.
Further Student Loan Reading
Who Qualifies For Nearly $4 Billion In Automatic Student Loan Forgiveness Under New Biden Initiative
5 Things Student Loan Borrowers Should Be Doing Right Now
Settlement Providing $6 Billion In Student Loan Forgiveness Clears Hurdle: 5 Key Takeaways
If You Went To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do