What Does the Biden-Harris Administration’s Student Debt Relief Plan Mean for You?

On August 24th, 2022, President Biden announced a three-part student debt relief plan intended to provide more breathing room to America’s working families as they continue to pay off federal student loans amidst the economic strains of the COVID-19 pandemic.

Students have long been struggling to pay student loan debt accumulated from the ever-growing cost of college. On average, college students graduate with nearly $25,000 in debt, according to a U.S. Department of Education analysis shared by the White House. With federal student loan payments scheduled to go back into effect in September, time was ticking on the student debt crisis.

Here’s what you need to know about the White House’s three-part plan to address student debt that was just announced.

Part 1: Final extension of student loan repayment pause

The Biden-Harris Administration has opted to extend the federal student loan payment pause one final time. Payments are now paused through the end of the year and set to resume in January 2023.

What do you need to do?

If you currently have a federal student loan, you do not have to do anything to get the benefits of the pause. Your loan will automatically remain on hold until January 2023, at which time you will need to begin making your payments again.

Part 2: Targeted debt relief to low- and middle-income families

To help curb the strain of upcoming debt repayments, the U.S. Department of Education will provide up to $20,000 in debt cancelation to recipients of the Pell Grant that have a loan through the Department.

If you were not awarded a Pell Grant, there is still some relief. Students not awarded a Pell Grant are eligible for up to $10,000 in student loan relief for loans through the Department of Education.

Who is eligible?

You are eligible for this loan forgiveness opportunity if your income is less than $125,000 for single individuals and $250,000 for households.

Remember that relief is capped at the amount of your outstanding debt. For example, if you’re eligible for $20,000 in loan forgiveness but only have a balance of $10,000, you will only receive $10,000 in relief.

What do you need to do?

First, check that you meet the eligibility requirements:

  • To be eligible, your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households)
  • If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt cancellation.
  • If you did not receive a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt cancellation.

How to know if you were awarded a Pell Grant

Login to your FSA account dashboard or your college’s online dashboard. Through either of these options, you should have access to either your previous Student Aid Reports or Aid Award Letters that outline the aid you received for college each year. If a Pell Grant was awarded to you, this is where you’ll be able to find that information.

If you no longer have access to your college dashboard or have difficulty navigating through your FSA dashboard, call your college’s financial aid office directly to ask for your records.

What’s next?

You may receive your debt relief automatically if the U.S. Department of Education has your income data. If the U.S. Department of Education doesn’t have your income data – or if you don’t know if the U.S. Department of Education has your income data, the Administration will launch a simple application in the coming months.

The application to submit income data will be available before the federal student loan repayments pause ends on December 31st, 2022. To be made aware of when the application is ready, visit the Department of Education subscription page.

If you are employed by non-profits, the military, or federal, state, Tribal, or local government, you may be eligible to have all of your student loans forgiven through the Public Service Loan Forgiveness (PSLF) program.

This program might forgive the remaining balance on your federal loan after working full-time for at least 10 years for federal, state, Tribal, local government, military, or a qualifying non-profit. If you’ve served for under 10 years, you might be eligible for some forgiveness.

What do you need to do?

You must enroll before October 31, 2022, for eligibility. Please visit PSLF.gov to apply.

Part 3: A more manageable student loan system

Income-driven repayments have long been part of the student loan process — the Biden-Harris Administration restructured these plans to make them more manageable for lower- and middle-income borrowers.

This proposed restructure of income-driven repayment would:

  • Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans (down from 10%)
  • Raise the amount of income that is considered non-discretionary income and protected from payments, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment
  • Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less
  • Cover the borrower’s unpaid monthly interest so no borrower’s loan balance will grow as long as they make their monthly payments, even if that monthly payment is $0 because their income is low

What do you have to do?

The administration is still working on implementing these changes. Sign-up for email updates from the U.S. Department of Education to learn how to take the next steps when they are announced.


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