President Biden’s new student-loan plan will help relieve millions of Americans from debt.
According to an article from The Wall Street Journal, the President’s new plan will eliminate up to $10,000 in federal-loan debt from those whose annual incomes are under $125,000 or for couples who earn less than $250,000 combined.
“In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023,” President Biden tweeted.
Some of the borrowers are also going to be eligible for total forgiveness up to $20,000 if they additionally received Pell Grants. These are a form of federal financial aid that would be awarded to students who live in low-income households.
“The plan is expected to benefit the majority of the more than 43 million people in the U.S. who hold a total of $1.6 trillion in student-loan debt”
President Biden also announced that he will be extending the pandemic-era student-loan pause payments and interests throughout the end of the year. The Trump administration first gave Americans the option to suspend their loans and soon after, Congress made it automatic.
The current pause was set to end on Aug. 31, but with the President’s recent plan, it was the closest the administration has come to hitting the end of the freeze extension.
This pause has been instated since March 2020 and has been continuously extended since.
The Federal Reserve Bank of New York believes that this continuous pause helped Americans save nearly $200 billion in payments.
People who are eligible for this new plan don’t need to take action right away in order to receive the debt relief.
“It’s a very complicated process and it’s going to take months to effectuate,” said Scott Buchanan, director of Student Loan Servicing Alliance. “Don’t do anything until you see something happen to your account.”
The new plan was in fact narrower than what he initially proposed when he was campaigning during the 2020 election.
“He’ll get a lot of credit for following through on something that he was committed to,” said Celinda Lake, a Democratic pollster.
Many people who work in the public service were also welcomed to some relief when there were temporary changes made to the U.S. Public Service Loan Forgiveness Program. Due to the changes, it helped more than 113,000 people receive student debt relief and have a total of $6.8 billion in forgiveness.
Nikki Indelicato is a Contributing Reporter at The National Digest based in New York. You can reach her at firstname.lastname@example.org.