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Biden’s student loan forgiveness plan: When does it start, who qualifies and how to apply?

It is expected that the student debt forgiveness plan is due to arrive next week at the latest. Here is all the information you need.

Update:
President Joe Biden and first lady Jill Biden make their way to Marine One on the South Lawn of the White House for a trip to Fort Myers.
Tom WilliamsGetty

It was announced last August that a plan for accessing the student debt forgiveness plan would come in October. This is yet to have happened but CNN reports that the application plan is due out very, very soon, so you should keep switched on to the news or be aware of updates on the Federal Student Aid website as the details will be released there first.

Pell Grant recipients and non-grantees will be able to cut $20,000 and $10,000 in student loan debt, respectively, so long as they make under $125,000 a year (250,000 for married couples). Of those surveyed in a Data for Progress poll in August, 29 percent of students had less than $10,000 in debt, highlighting the large impact President Biden’s decision will have on millions of borrowers.

According to the Department of Education the application period will be short. Although details have been released we do know the deadline for the application is 31 December 2023, giving student plenty of time to access it.

What else is included in the student debt plan?

In addition to debt relief, the administration has chosen to extend the student loan moratorium “one more time” through 31 December 2022. The White House made clear this would the last time saying “Borrowers should expect to resume payment in January 2023.”

The new rules would cap what borrowers would be required on a monthly basis to five percent of their discretionary income. The current repayment plan places this cap at 10 percent. The rules also “raise the amount of income that is considered non-discretionary,” to ensure that more of people’s livelihood is protected from the predatory student debt payments. However, this only applies to undergraduate loans.

If students did pay some of their student debt duing the payment moratorium then it is possible to claim this money back. To do this students will need to call their debt servicer. This debt will still need to be paid, but for some students who paid off their debt during covid-19 they will be able to pocket however much is left of the loan forgiveness that doesn’t go towards their debt.