Will My Student Loans Be Cancelled Under The Biden-Harris Debt Relief Plan?[yoast-breadcrumb]
Hey there! If you’re wondering whether your student loans could be forgiven under President Biden’s new debt relief plan, you’re not alone. Lots of folks are trying to figure out if they qualify for this program and what it could mean for their finances. As a company that cares about empowering people to get out of debt, we want to help explain the details in a simple way. Here’s what you need to know:
The Basics of Biden’s Plan
In August 2022, President Biden announced a new student debt relief plan that would forgive up to $10,000 in federal student loan debt for certain borrowers making less than $125,000 a year (or $250,000 for married couples). Some folks who received Pell Grants could have up to $20,000 forgiven. This plan applies to loans held by the Department of Education, not private lenders.
The White House estimates this could help over 40 million Americans get some debt cancelled. That’s pretty huge! No application is required for most folks – the Department of Education will automatically determine eligibility based on income data they already have. Borrowers should see their balances decrease by the forgiven amount within 4-6 weeks after applying.
To get student debt cancelled under the Biden-Harris plan, borrowers must meet a few criteria:
- Loans must be held by the Department of Education (so no FFEL or Perkins loans held by banks)
- Individual income under $125,000 in either 2020 or 2021
- Married couples must have income under $250,000
- Only undergraduate loans qualify, not graduate loans
The Department of Education has a handy student loan debt relief website where you can submit an application to check your eligibility status and see how much relief you can get. It takes like 2 minutes, so it’s worth doing!
What Types of Loans Are Included?
Most federal student loans will qualify for forgiveness under the Biden-Harris plan, including:
- Direct Loans (defaulted loans are also eligible!)
- Parent PLUS and Grad PLUS loans
- Federal Family Education Loan (FFEL) Program loans
- Perkins Loans
Some key exceptions are FFEL or Perkins loans not held by ED, along with private student loans. See the Debt Relief FAQs for specifics.
What If I Already Paid Off My Loans?
We feel ya – it can be frustrating if you already paid off your student loans and now others are getting relief. But try to see it as a win overall for the 45 million Americans still struggling with college debt. Student debt has become a huge economic crisis, and relief for some borrowers can stimulate the economy and allow more people to buy homes, start businesses, have kids and save for retirement. Hopefully it will pave the way for more reforms to college costs in the future.
If you paid your loans off during the pandemic payment pause after March 2020, you may be eligible for automatic refunds from your servicer – contact them to check. Otherwise, paid-off borrowers won’t see direct benefits from this one-time relief program.
How Can I Use the Forgiveness Wisely?
This student loan forgiveness offers a great chance to get your finances on stronger footing:
- Build your emergency savings fund
- Pay off high-interest debt like credit cards
- Invest for retirement or other goals
- Make a plan for repaying any remaining student loan balance
Could More Forgiveness Be Coming?
Good question! Many experts think this initial round of debt relief is just the beginning. The Biden administration has said they will assess the impacts of this program and look at options for broader forgiveness. Groups like the Debt Collective will keep pushing for more radical reductions. Congress is also looking at reforms like making community college free and reducing interest rates. Keep an eye out for new proposals and make sure to vote in the midterm elections!
We hope this overview gives you a better sense of whether you could qualify for federal student loan forgiveness under the new Biden-Harris plan. It’s not perfect, but for millions of borrowers this relief could remove a huge financial burden. Let’s keep working for more permanent solutions to fix our broken systems of college affordability and student debt!