CHICOPEE, Mass. (WWLP) – It’s been 24 hours since the announcement from the Biden administration to forgive $10,000 in student loan debt for middle and low-income borrowers and paving the way for cheaper repayment for current and future students.
It’s a controversial move by the White House but something that Biden promised to tackle during this 2020 campaign, now a plan to help borrowers is finally in motion. All federal undergraduate, graduate, and parent-plus loans qualify under the plan. Private loans do not.
You must make less than $125,000 a year individually or double that as a couple. That income can be from your 2020 or 2021 tax returns. According to the federal reserve, borrowers currently hold 1.5 trillion in student debt. This is the second largest category of debt, behind mortgages.
The forgiveness will eliminate all student loan debt for roughly 14 million people. Over 30 million will still have debt to pay off some with a student loan balance over $100,000.
“I think they should do more. What’s $10,000 going to do? I have a student loan of like $100,000, what’s that going to do to my pocket? I still have to pay my student loan.”
Additionally, the repayment freeze has been extended to January 2023. At that time, borrowers will have the option to cap their monthly payments at 5 percent of their monthly income.
Borrowers who went to college on Pell Grants are eligible for an additional $10,000 in forgiveness. Federal Pell Grants usually are awarded only to undergraduate students who display exceptional financial need.