The US Department of Education has a plan to forgive $10,000 in student loans.
Here’s what you need to know — and what it means for your student loans.
According to Politico reports, the Department of Education has “detailed plans” to implement large-scale student loan forgiveness for millions of student borrowers. If President Joe Biden approves those plans, which has yet to happen, millions of student borrowers could get $10,000 in student loan forgiveness.
Student loan waiver: here are the details
Here’s what the historic student loan relief could look like, per Politico, although the plans have not been finalized and are subject to change:
- $10,000 student loan forgiveness;
- applies to all federal student loans;
- student loan forgiveness would also include Parent PLUS Loans and Graduate PLUS Loans;
- includes federal student loans that do not belong to the federal government, suggesting that FFELP loans and Perkins loans could be included;
- borrowers with Pell grants may be eligible for additional student loan forgiveness;
- individual borrowers with income of $150,000 and $250,000 per family could get student loan forgiveness, although an income threshold has not been finalized;
- student loan forgiveness could be automatic within months for student borrowers for whom the Ministry of Education has income information;
- alternatively, student borrowers could apply online and certify their income to qualify for student loan forgiveness, if there is an income threshold;
- the potential automatic student loan forgiveness for approximately 8 million student borrowers who are in default; and
- the first student loan forgiveness could occur within 45 days of the announcement of large-scale student loan forgiveness, with potentially millions of student borrowers getting their student loans forgiven within 90 days.
“The Department’s review of large-scale debt cancellation is still ongoing and no decision has been made,” an Education Department spokesperson told Politico. “We are not going to comment on alleged internal documents or internal deliberations on hypothetical scenarios.”
Student loan cancellation: Biden makes final decision
Crucially, the White House said Biden had not decided on a large-scale student loan forgiveness. Ultimately, the decision to enact large-scale student loan relief rests with Biden, not the Department of Education, and any potential plans are subject to change. Biden has said he will decide on a broad student loan forgiveness by Aug. 31, when the student loan payment break expires. As Biden offered $10,000 in student loan forgiveness, Progressive members pressured Biden to forgive $50,000 in student loans. However, Republicans in Congress oppose the large-scale cancellation of student loans, calling it wasteful spending, redistributing wealth and a recipe for increasing inflation. For example, Rep. Virginia Foxx (R-NC), the top Republican on the House Education and Labor Committee, said Biden canceled $400 billion in student loans and that large-scale cancellation student loans was a “political ploy” for Democrats. win votes in midterm elections in November. While 107 members of Congress have urged Biden to extend the student loan payment pause, Republicans want student loan payments to resume on September 1. If federal student loan payments restart, millions of student borrowers will start making payments within weeks. Make sure you’re ready for the potential restart of student loan repayment. Here are some of the best ways to pay off student loans faster and save money: