On August 24, President Biden announced a three-part plan addressing student loan debt. The three parts encompass the following:
- The Administration has already extended the student loan repayment pause several times due to economic challenges resulting from the pandemic. As part of this plan, the pause will be extended a final time through December 31, 2022, with payments resuming in January 2023.
- Borrowers earning less than $125,000 a year, or $250,000 for married couples, are eligible for up to $20,000 in student loan forgiveness if they received Pell Grants. Individuals who earn less than $125,000 a year but did not receive Pell Grants are eligible for $10,000 in loan forgiveness.
- The Administration is proposing a new income-based repayment plan rule that will reduce future monthly payments for low- and middle-income borrowers. Borrowers with undergraduate degrees and a Pell Grant would have their repayments capped at 5% of monthly income.
The Department of Education will announce details on how borrowers can claim this relief through an application in the coming weeks. Borrowers will have until Dec. 31, 2023 to apply.
Get more details from the Department of Education.