Student loan forgiveness: what you need to know about Biden’s plan
President Joe Biden said Wednesday that many Americans can have up to $10,000 in federal student loan debt forgiven. That amount increases to $20,000 if they qualified for Pell grants. Here’s what we know so far and what it means for people with outstanding student loans:
You qualify to have up to $10,000 forgiven if your loan is held by the Department of Education and you make less than $125,000 individually or $250,000 for a family. If you received Pell grants, which are reserved for undergraduates with the most significant financial need, you can have up to $20,000 forgiven. If you are a current borrower and a dependent student, you will be eligible for relief based on your parents’ income, rather than your own.
The payment freeze will be extended one last time, until 31 December. The freeze started in 2020 as a way to help people struggling financially during the Covid-19 pandemic and it’s been extended several times since. It was set to expire on 31 August.
Interest rates will remain at 0% until repayments start. Under an earlier extension announced in April, people who were behind on payments before the pandemic will automatically be put in good standing.
Details of that have not been announced, but keep an eye on the federal student aid website for more details in coming days.
Roughly 27 million borrowers who qualified for Pell grants will be eligible to receive up to $20,000 in forgiveness under the Biden plan.
Pell grants are special government scholarships for lower-income Americans, who currently can receive up to $6,895 annually for roughly six years.
Pell grants themselves don’t generally have to be paid back, but recipients typically take out additional student loans.
“This additional relief for Pell borrowers is
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