Millions who owe money in federal student loans will have those debts forgiven under a plan announced by President Joe Biden on Wednesday, but one thing could change how much you are eligible to receive.
Biden is set deliver on his campaign promise to provide $10,000 in debt cancellation for many Americans — and up to $10,000 more for those with the greatest financial need.
Biden tweeted details of his administration's plan for student debt forgiveness, with borrowers who earn less than $125,000 a year, or families earning less than $250,000, being eligible for the $10,000 loan forgiveness. For recipients of Pell Grants, which are reserved for undergraduates with the most significant financial need, the federal government would cancel up to an additional $10,000 in federal loan debt.
So, if your student loan was financed through the federal government, you may be eligible for forgiveness. Private loans are not currently eligible for the forgiveness plan.
But many may be asking: what is a Pell Grant?
According to a website set up by the Biden Administration surrounding the plan, Pell Grants "usually are awarded only to undergraduate students who display exceptional financial need and have not earned a bachelor's, graduate, or professional degree."
In some cases such grants could be given to students in a postbaccalaureate teacher certification program.
About 8 million people will be eligible to receive relief automatically because the U.S. Department of Education already has their current income information.
If the agency doesn't have your current income information or if you don't know if you're unsure, you will need to fill out an application. That application is not yet available, but will be in the coming weeks, the administration said in its announcement.
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To be notified by the U.S. Department of Education when the application is open, sign up at the Department of Education subscription page.
The moratorium on student loan payments has also been extended once again through Dec. 31, 2022. The administration says this will be the last extension and that borrowers whose debt will not be forgiven should plan to begin repayment in January 2023.
