Here’s what happens next when Biden cancels student loans
Here’s what happens next when President Joe Biden cancels student loans.
Here’s what you need to know – and what it means for your student loans.
Any day, Biden will announce his important decision on whether to enact a large-scale foreclosure on student loans. Biden could offer historic student loan relief to more than 40 million student loan borrowers who have waited years for student loan cancellations. If Biden proceeds with broad student loan forgiveness, here’s what could happen.
1. Student Loan Forgiveness: Here’s what could be in Biden’s plan
Leaked US Department of Education documents show a possible student loan forgiveness plan that could set the framework for Biden. The plan calls for $10,000 in student loan forgiveness, consistent with the amount of student loan cancellation Biden has supported since running for president. Importantly, according to the White House, Biden has not yet decided whether to call in student loans or whether he would consider calling in $10,000 in student loans. Progressive Democrats in Congress, like Sen. Elizabeth Warren (D-MA), are still renewing their pressure on Biden to call $50,000 in student loans. Biden isn’t the only one with a plan for student loan forgiveness. There’s also another blockbuster student loan cancellation plan — here’s what’s inside.
2. Here’s who wants to qualify for student loan cancellation
Here’s who might qualify for student loan forgiveness. While eligibility could change, the leaked plan showed that student loan forgiveness would include more than 40 million federal student loan borrowers. This is a big win for FFELP and Perkins loan student borrowers who have historically been excluded from historic student loan relief. The proposed student loan cancellation plan would also include Parent PLUS loans for parents who borrowed student loans for their dependent child and Grad PLUS loans for college student loan borrowers. Finally, large-scale student loan cancellations could include an income threshold of $150,000 for individual student borrowers and $250,000 for families.
3. Student Loan Forgiveness: Timing
With Biden issuing sweeping student loan forgiveness, many student loan borrowers will wonder when their student loans will be called. The Biden administration has not released any formal guidance on the timing of student loan cancellations. However, internal documents from the U.S. Department of Education show that some student-loan borrowers could receive student-loan forgiveness as early as 45 days after Biden’s possible announcement. Other student borrowers might wait 90 days or more. This schedule anticipates no legal challenges to a possible cancellation of the student loan that could delay implementation, such as through an injunction.
4. How to Apply for Student Loan Forgiveness
The Biden administration has not announced a formal application process for a wholesale student loan cancellation. However, internal documents from the US Department of Education indicate that the application process for student loan forgiveness could be streamlined. For example, if the Biden administration imposes an income threshold, Biden could automatically forgive student loans if they previously provided their income to the US Department of Education. If the Department of Education doesn’t have your income, you may be able to apply online and self-report your income to determine if you qualify for student loan forgiveness.
Student loans: next steps
The disbursement of the student loan ends within a few days. Biden said he will make a decision on student loan forgiveness before the end of the student loan payment pause on August 31, 2022. Alternatively, Biden could decide not to enact large-scale foreclosures on student loans. Student loan borrowers have enjoyed historic student loan relief since March 2020, including no mandatory federal student loan payments and 0% interest on student loans. temporal occurrence. However, student loan borrowers should prepare now for student loan payments to resume starting September 1. Here are some of the best ways to save money on your student loans: