President Joe Biden announced his plan for student debt relief early this Wednesday, outlining cancelation plans for borrowers along with an extension of the repayment moratorium.
The news came after rumors circulated that the president would be making an announcement regarding student loan relief. In a statement released by the White House, Biden outlines his plan for the mounting student debt crisis as inflation soars, explained in three parts below:
- Debt relief for loan amounts held by the Department of Education for those making less than $125,000 individually or $250,000 for married couples. $20,000 in debt will be canceled for those who were Pell Grant recipients, while $10,000 in debt will be canceled to non-Pell Grant recipients. The pause on federal student loan payments has also been extended one final time through December 31st, 2022.
- Cutting the amount of monthly payments for borrowers in half, bringing it down to 5% of discretionary income. This new approach is to address the issue of income-driven repayment plans, which many borrowers say is too high and takes a lot of spending power out of their monthly budgets. This change is for both current and future borrowers. In addition to income-driven repayment reform, there is also fixing the Public Service Loan Forgiveness (PSLF) program to provide the correct amounts of credit towards loan forgiveness for any borrows employed by the military, nonprofit, or in federal, state, tribal, or local government.
- Holding colleges and schools accountable for raising the cost of attendance and reducing the overall cost itself. This measure is aimed at making college more affordable while also enacting accountability towards schools when they raise prices.
The anticipated aid comes at a time when college debt is higher than ever. The COVID-19 moratorium on student loan repayments gave many relief, with calls for canceling student loan debt entirely gaining traction online:
The application for relief is estimated to become available by January 2023, when the pause on repayments end.