Biden announced up to $20k in student loan forgiveness for millions of people. Some will get it automatically. Others will need to apply. And a few won’t get it at all.
After deliberating for months over fairness and concerns about throwing gas on the inflation fire, President Joe Biden announced he would keep his campaign promise and take executive action to cancel $10 thousand in federal student debt for millions of borrowers who meet income requirements and $10 thousand more for those who received a Pell Grant to attend school.
About 95% of all federal student loan borrowers qualify for debt relief — including those still in school and others who borrowed Parent PLUS Loans. Nearly eight million people will automatically get debt relief. But everyone else will need to use an application the U.S. Department of Education released last week.
Broad-based student debt cancellation will be a one-time thing, according to Bharat Ramamurti, a deputy director of President Biden’s National Economic Council. He added that the authority to cancel debt is “conditional on an emergency [i.e., the pandemic] … and as we transition into repayment, it is not the kind of authority you can use over and over again.”
There have been several legal challenges to Biden’s student loan forgiveness plan. Republican lawmakers have also introduced legislation seeking to block the president from forgiving federal student debt.
The White House has responded to those attacks by tweaking how the cancellation was implemented. The first change was to allow borrowers to opt out of the relief. So far, over 100 people have chosen to skip out on getting their debt canceled.
The second change was to block borrowers with commercially-held Federal Family Education Loans from accessing the forgiveness opportunity. Out of nowhere, the department announced that FFEL Loan borrowers who hadn’t consolidated their loans into a Direct Consolidation Loan by Sep. 28, 2022, were no longer eligible for Biden’s plan.
Ahead, keep reading to learn more about President Biden’s $20k student loan forgiveness plan.