The Biden Administration is revisiting its first term to-do list and is checking off more and more each day. In August, they announced they would be canceling up to $10,000 in student loan debt for those earning less than $125,000 a year, or $250,000 for families and $20,000 for Pell Grant recipients. They also announced that they would be continuing the moratorium on student loan re-payment for borrowers until January 2023.
Current borrowers who are still listed as dependent students are eligible for relief based on their parents’ income rather than their own.
Key details of the announcement include a revision that no borrower making under the annual equivalent of the $15 minimum wage will have to make a student loan payment and adds caps on repayment for borrowers so they will not have to pay out more than 5% of their discretionary income monthly on undergraduate loans.
The administration also proposed fixes to the broken Public Service Loan Forgiveness (PSLF) program by adding a rule that borrowers who have worked at a nonprofit, in the military, or in federal, state, tribal, or local government, receive appropriate credit toward loan forgiveness. These improvements will build on temporary changes the Department of Education has already made to PSLF, under which more than 175,000 public servants have already had more than $10 billion in loan forgiveness approved.
The Department of Education estimates that, among borrowers who are no longer in school, nearly 90% of relief dollars will go to those earning less than $75,000 a year.