Biden's College Debt Solution: What Borrowers Need to Know

President Biden's plan to tackle college debt is a game-changer for many borrowers. Under his proposal, borrowers with loans held by the Department of Education may see up to $20,000 in debt forgiven.

The plan focuses on borrowers who earn less than $125,000 per year and have outstanding federal student loans. This means that many low- and middle-income borrowers will be eligible for debt forgiveness.

To qualify, borrowers must have received a Pell Grant in college, which is typically awarded to students from low-income families. This is a crucial factor in determining eligibility for the plan.

Borrowers can face challenges with their student loans, but there are options available to help. About 8 million borrowers are enrolled in the SAVE plan, which is currently on hold due to litigation.

Borrowers enrolled in SAVE are not required to make payments, but this pause could delay student loan forgiveness for some. To resume making payments that count towards debt relief, borrowers can switch into older repayment plans like Pay As You Earn or Income-Contingent Repayment.

Staying current on student loan payments is crucial to avoid defaulting on loans. Borrowers can contact their servicer to explore options if they're struggling to afford payments.

If you're a borrower, it's essential to stay current on your payments to avoid defaulting on your loans. Borrowers in repayment should make their payments on time and contact their servicer if they need help affording their payments.

You can switch to older repayment plans like Pay As You Earn or Income-Contingent Repayment to resume making payments that count toward debt relief. These plans can help you qualify for Public Service Loan Forgiveness after making 120 qualifying payments.

As of last week, the Department of Education allowed borrowers to switch into these older plans, so be sure to check with your servicer to see what options are available to you. Borrowers can also consider refinancing their private loans to lower their interest rate or change their repayment term, but only if it makes financial sense.

Don't rely on the SAVE plan being implemented, as it's currently on hold due to litigation. Borrowers enrolled in SAVE are not currently required to make payments, but this pause may delay student loan forgiveness for some of them.

To better prepare for entering repayment, use a student loan calculator to see your estimated monthly payment based on various terms and interest rates. This can help you choose the best term and loan amount for you, see how much you'll pay in total interest, or prepare your budget to fit the new payment.

If you qualify for forgiveness through a program like Public Service Loan Forgiveness, you'll usually need to do the work to get it. This includes making consistent monthly payments for years until you qualify and filling out the application and submitting the necessary documents when you do.

The Pell Grant maximum increase is a significant development for students in need. Under President Biden's plan to reduce the cost of college, the maximum Pell Grant award was increased by $900.

This increase more than doubled the maximum award from the previous administration. The maximum amount awarded for the 2021-2022 academic year was $6,495.

Today, eligible students can receive up to $7,395 in aid they don't need to pay back.

The Biden administration's efforts to forgive student loans have been a mixed bag. Almost five million borrowers had their loans forgiven, but millions more were left disappointed.

Mark Kantrowitz, a leading student loan expert, notes that Biden was able to automate several types of student loan forgiveness and forgive more student debt than any previous president.

The administration's updates to programs like the PSLF waiver, IDR adjustment, and borrower defense resulted in the cancelation of over $175 billion in student debt.

A breakdown of the total amount includes:

Before the start of his administration, only 7,000 public servants had received forgiveness through the PSLF program, but today over one million people have received forgiveness through the program.

The most ambitious part of Biden's plan was the one-time cancelation of up to $20,000 in student loan debt for each borrower earning under $125,000 ($250,000 if married), but the Supreme Court ruled the plan was unconstitutional.

Relief is on the way for millions of Americans struggling with student loan debt. The Biden administration is proposing a plan to provide debt relief to borrowers.

Under the proposal, borrowers can qualify for forgiveness without an application, with the Education Secretary providing one-time relief to those at high risk of default. This is a big deal, as over 1 million defaults are seen annually in the student loan system.

Borrowers who don't qualify for automatic forgiveness can still get relief by filling out an application. The department will assess 17 factors, including debt balance, household income, and whether loan payments are keeping them from affording basics.

Financing a college education is supposed to help students climb the economic ladder, not leave them buried in debt.

The Biden administration's plan for student debt relief was a game-changer, with over $175 billion in debt forgiven for nearly five million borrowers.

While this is a significant accomplishment, it's essential to note that Biden did not fulfill his campaign promise for sweeping loan forgiveness.

Here are some key facts about the Biden administration's plan:

It's crucial to understand that student loan forgiveness is not guaranteed, and there are many assistance resources available to help you repay your loans.