Roughly 800,000 borrowers are now eligible for President Biden’s new student loan forgiveness plan. Here’s all you need to know about it.
President Biden’s New Student Loan Forgiveness Plan To Cancel $39 Billion Student Loans
Following the US Supreme Court‘s decision to shut down the previous White House student debt forgiveness plan just last month, the Biden administration recently stated last Friday that Biden’s new student loan forgiveness plan will now cancel $39 billion in federal student loans for more than 804,000 borrowers.
The Education Department stated that it will cancel student loans by accounting payments made under income-driven repayment plans, which are limited to a specific percentage of borrowers’ income that would have qualified for loan forgiveness but were previously neglected by loan servicers who collect payments.
This new student loan forgiveness plan varies from the one that the Supreme Court initially rejected, which would have forgiven loans totaling $10,000 for the majority of student borrowers and $20,000 for those who receive Pell Grants, covering nearly 37 million people.
Who Are Eligible For The New Student Loan Forgiveness?
Borrowers who have taken out Direct Loans or Federal Family Education Loans held by the Education Department, including any Parent PLUS loans, may be eligible for the new student loan forgiveness plan, according to a statement from the Education Department last Friday.
To qualify for the new student loan forgiveness plan, borrowers would have needed to have made the equivalent of 240 or 300 monthly payments over 20 or 25 years, respectively. Depending on the loan’s origination date, the kind, and the specific income-driven repayment plan the borrower has chosen, different installments may be necessary.