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Biden Cancels $20,000 of Student Loans in Historic Student Loan Relief
Updated On September 22, 2022
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President Joe Biden cancels $20,000 of student loans for millions of student loan borrowers. Here’s what you should know about this historic student loan relief.
In this article, you will learn:
- Biden cancels $20,000 of student loans
- Student loan forgiveness: $10,000 of student loan cancellation
- Student loan cancellation: how to qualify
- Student loan forgiveness: next steps
Biden cancels $20,000 of student loans
Biden announced up to $20,000 of wide-scale student loan forgiveness for millions of student loan borrowers. This announcement will eliminate all federal student loans for approximately 20 million student loan borrowers. Student loan borrowers have been waiting years for Biden to announce his decision on broad student loan forgiveness. Here are the key details.
(Learn more: How to pay off student loans)
Student loan forgiveness: $10,000 of student loan cancellation
Biden’s new student loan plan includes $10,000 of student loan forgiveness for all eligible federal student loan borrowers who didn’t receive a Pell Grant in college. Student loan borrowers who received a Pell Grant in college will get up to $20,000 in student loan forgiveness. According to the White House, Pell Grant recipients generally have household incomes under $60,000 a year.
Biden has supported $10,000 of student loan forgiveness for borrowers since he was a presidential candidate during the 2020 election. The president has called on Congress to pass legislation to cancel student loans, but Congress never acted. Instead, Biden used his executive authority under the HEROES Act of 2003 to cancel student loans as part of the Covid-19 emergency.
Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) want Biden to cancel $50,000 of student loans. While they support Biden’s new student loan plan, they may continue to push Biden to cancel more student debt. However, Biden has publicly said he doesn’t support $50,000 of student loan forgiveness.
(Read: The Ultimate Guide To Student Loan Forgiveness)
Student loan cancellation: how to qualify
To qualify for this student loan cancellation, student loan borrowers will need to meet the following qualifications:
- You must be a student loan borrower with a federal student loan that is owned by the U.S. Department of Education; and
- You earned up to $125,000 of annual income (or $250,000 as a married or joint filer) during the Covid-19 pandemic.
Make sure that your federal student loan is owned by the federal government. For example, most FFELP Loans and Perkins Loans are owned by third party investors, financial institution and colleges and universities.
(Learn more: How to pay off $100,000 of student loans)
Student loan forgiveness: next steps
What are your next steps? First, logon to Federal Student Aid using your FSA ID. Determine how much federal student loan debt you hold. Private student loans are ineligible for Biden student loan forgiveness. Second, if the U.S. Department of Education already has your income information, then student loan forgiveness could be automatic. If you haven’t provided income information to the Education Department, then you should be able to apply online once a link is available. Third, if all your federal student loans aren’t canceled, then you should evaluate all your options to pay off student loans faster. This includes student loan refinancing, income-driven repayment and other options for student loan forgiveness.
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