By now, you have most likely heard about the announced three-part plan to help working and middle-class federal student loan borrowers.
Are you confused by the myriad of information you’ve seen? Then let’s go over some details.
The Facts on the three-part plan:
- The loan repayment pause has been extended until 31 December 2022, this will be the final pause.
- The plan will forgive up to $20,000 in student loans to Pell Grant recipients, and up to $10,000 for non-Pell Grant recipients.
- To be eligible for the loan forgiveness, annual income must be below $125,000 for individuals and below $250,000 for married couples or heads of households.
- The proposed would require borrowers to pay no more than 5% of their discretionary income monthly, down from the previous 10%.
- No borrower earning less than 225% of the federal poverty level will need to make payments (and no interest will be incurred for those individuals).
Did you know?
- The average bachelor’s level graduate has student loan debts of $25,000
- 35% of borrowers have less than $10,000 in student loans, which only accounts for 5% of the total student loan debt.
- 6% of borrowers owe at least $100,000, which accounts for 33% of the total student loan debt (see graph below).
- You don’t need a credit check or a cosigner to get most federal student loans.
- Student debt has more than doubled since 2008.
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The Biden-Harris Administration’s Student Debt Relief Plan Explained. The Biden-Harris Administration’s student debt relief plan explained. (n.d.). https://studentaid.gov/debt-relief-announcement/
Federal student loans for college or career school are an investment in your future. (n.d.). https://studentaid.gov/understand-aid/types/loans
The United States Government. (2022, August 24). Fact sheet: President Biden announces student loan relief for borrowers who need it most. The White House. https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/
Yilla, K., & Wessel, D. (2022, March 9). Five facts about student loans. https://www.brookings.edu/blog/up-front/2019/11/12/five-facts-about-student-loans/