Joe Biden will announce a massive forgiveness of student loans on Wednesday afternoon in a move Senate Majority Leader Chuck Schumer (D-NY) bragged as a “flash of the pen.” An estimated $300 billion in loans up to $125,000 a year ($250,000 for couples) and up to $20,000 for Pell grants will be forgiven by the Biden administration, citing a new interpretation of the Admin HEROES Act of 2003. Which says the secretary of education has the authority to use national emergencies—especially the Covid pandemic—to wipe out student debt en masse.
File screen image.
Schumer: “With the stroke of a pen, President Biden has taken a major step forward in solving the student loan crisis by canceling significant amounts of student loans for millions of borrowers.”
With the stroke of a pen, President Biden has taken a major step forward in solving the student loan crisis by canceling significant amounts of student loans for millions of borrowers.
— Chuck Schumer (@senshumer) August 24, 2022
Curiously, a senior administration official was unable to cite Biden’s legal authority while briefing reporters on Wednesday.
popular: BREAKING: Marjorie Taylor Green swore at home Wednesday morning
“I’m not a lawyer,” says a senior administration official — who was tasked with briefing reporters on today’s announcement — when asked under what authority Biden is canceling student loans.
“My tendency is to defer to the education department or the DOJ,” the official added.
— Philipp Melanchthon Wegman (@Philip Wegman) August 24, 2022
Biden will speak from the White House at 2:15 pm EDT.
I will present comments on my administration’s student loan relief plan at 2:15 PM ET.
In the meantime, visit https://t.co/80wXPTae6V for more information.
— President Biden (@POTUS) August 24, 2022
A Wharton analysis said Biden’s plan would cost taxpayers $300 billion this year and would mostly benefit the upper classes.
According to a Penn Wharton budget model, the cost of Biden’s student loan bailouts will be $300 billion in 2022 alone, and about 70% of the benefits will go to the top 60% of earning households. https://t.co/ln9nNP8MdN
— RNC Research (@RNCResearch) August 24, 2022
Biden admin statement details loan forgiveness:
The Biden-Harris administration’s student loan relief plan explained
What the program means to you, and what comes next
President Biden, Vice President Harris, and the U.S. Department of Education announced a three-part plan to help working and middle-class federal student loan borrowers return to regular payments as pandemic-related aid expires. The plan has been announced. This plan includes loan forgiveness of up to $20,000. Many borrowers and households are asking themselves “What do I have to do to claim this relief?” This page is a resource for answering those questions and more. More details will be announced in the coming weeks. To be notified when the process officially opens, sign up to the Department of Education’s subscription page.
The Biden administration’s student loan debt relief plan
Part 1. Final extension of the student loan repayment pause
Because of the economic challenges posed by the pandemic, the Biden-Harris administration has extended student loan repayment pauses several times. Because of this, no one with federally held debt has had to pay a single dollar in debt payments since President Biden took office.
To ensure a smooth transition to repayments and prevent unnecessary defaults, the Biden-Harris administration will extend the moratorium deadline to December 31, 2022, with payments resuming in January 2023.
Frequently Asked Questions:
Do I need to do anything to extend my student loan moratorium until the end of the year?
no An extended pause will automatically occur.
Part 2. Providing targeted debt relief to low- and middle-income families
Loan Pell Grants up to $10,000 held by the U.S. Department of Education to facilitate the transition to repayment and to assist borrowers or borrowers most at risk of default after resuming payments. Will provide recipients with up to $20,000 in loan cancellation. In canceling loans to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for families.
In addition, borrowers who are employed by a nonprofit, military, or federal, state, tribal, or local government may be eligible to have all of their student loans forgiven through the Public Service Loan Forgiveness (PSLF) program. This is due to time-bound changes that leave some eligibility criteria in the PSLF program. These temporary changes expire on October 31, 2022. For more information on eligibility and requirements, visit PSLF.gov.
Frequently Asked Questions:
How do I know if I am eligible for loan cancellation?
To qualify, your annual income must be less than $125,000 (for individuals) or $250,000 (for married couples or heads of households).
If you receive a Pell Grant in college and meet the income threshold, you’ll be eligible for up to $20,000 in loan cancellation.
If you did not receive a Pell Grant in college and meet the income threshold, you may be eligible for up to $10,000 in loan cancellation.
What does “up to” mean in “up to $20,000” or “up to $10,000”?
Your relief is limited to the amount of your outstanding loan.
For example: If you qualify for $20,000 in debt relief, but owe $15,000, you’ll only get $15,000 in relief.
What do I need to do to get loan forgiveness?
About 8 million borrowers may automatically qualify for relief because relevant income data is already available in the U.S. Available from Department of Education.
If the US The Department of Education doesn’t have your income data—or if you don’t know the U.S. Whether or not the education department has your income data, the administration will launch a simple application in the coming weeks.
Applications will be available before the federal student loan repayment moratorium ends on December 31.
If you would like to be notified by the US Department of Education when applications are open, please sign up on the Department of Education subscription page.
What is the Public Service Loan Forgiveness Program?
The Public Service Loan Forgiveness (PSLF) program forgives the remaining balance on your federal student loans after 120 payments working full-time for federal, state, tribal, or local governments; the military; or a qualified non-profit.
The temporary changes, set to expire on October 31, 2022, provide flexibility that makes it easier than ever to obtain forgiveness by allowing borrowers to receive credit for past payments that would not qualify for PSLF.
Entries on or after November 1, 2022 will not be eligible for this treatment. We encourage borrowers to sign up today. Visit PSLF.gov to learn more and apply.
Part 3. Make the student loan system more manageable for current and future borrowers
Income-based repayment plans have long existed in the US Department of Education. However, the Biden-Harris administration is proposing a rule to create a new income-driven repayment plan that would significantly lower future monthly payments for low- and middle-income borrowers.
The rule will be:
Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is lower than the 10% available under the most recent income-driven repayment plan.
Increase the amount of income that is considered non-discretionary income and therefore protected from repayment, guaranteeing that any borrower earning less than 225% of the federal poverty level – for a single borrower Have to make monthly payments – about the annual equivalent of $15 minimum wage.
For borrowers with a loan balance of $12,000 or less, forgive loan balances after 10 years of payments, instead of 20 years.
Cover the borrower’s unpaid monthly interest, so that unlike other existing income-driven repayment plans, a borrower’s loan balance will not increase as long as they make their monthly payments – even if they are monthly. The payment should be $0 because his income is low.
The Biden-Harris administration is working to speed up student loan reform. Check back on this page for updates on progress. If you want to be the first to know, sign up for email updates from the US Department of Education.