The White House will announce student debt forgiveness of up to $10k ( or $20k for pell grant recipients) for those earning less than $125k annually ( or household income of less than $250k), the NYTimes confirmed.
The means testing cutoff is noteworthy. An annual household income of 250k places one in the top 7% of houeholds in the US; the income limit for individuals is the top 11% of US annual incomes.
3 Likes
The official announcement has been posted:
Do you think this applies to students currently in college who have loans already? I read the info and it just talks about loans not having graduated. Senior twins don’t have much in loans – $3500 for one and $7000 for the other – but it would be helpful for them of course.
It was not in the morning announcement but previous leaks had stated the administration planned to use July 1, 2022, as the loan-date cut-off. If that holds, sophomores thru seniors with loans would benefit but not first-years. I’m also not sure how the Dept of Ed will factor the income cap into all of this - as in, for dependent students, will they consider students’ income and/or their parents’ income?
3 Likes
So presumably based on calendar year 2021 income and status?
That’s what I’m wondering for our 19, 21, 24, and 26 year olds who earn less than $125,000. These loans are theirs, 100%.
NYT reporting has income test attributable to parents who claim child with loan as a dependent.
I’m still a student. Do I qualify?
Yes, but if someone else claims you as a dependent when filing taxes, your eligibility will be based on that person’s income and not your own. https://www.nytimes.com/2022/08/24/business/biden-student-loan-forgiveness.html
3 Likes
Doesn’t matter if they use ours or theirs, they’re/we’re eligible 
Although I love their phrasing: To be eligible, your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households)
Weren’t no falling in our case.
2 Likes
Does it include graduate student loans? If they use 2021 income then D2 will qualify.
3 Likes
It will be interesting to see how this affects our D. She will finish her grad program in May of 23 so her undergrad loans will not come due until after that. I doubt she will make more than $125k and she was a partial Pell grant student. I assume this is based on her income and not on ours (we do not claim her) and won’t be an issue until next year. She was able to get a graduate assistantship and a relative is paying the rest of her grad school costs so the only loans she’ll have are about $18k in subsidized undergrad loans. We are prepared to work with her on this so it’s not like we weren’t planning on it. I think everyone involved should be grateful to the taxpayers for this unexpected windfall.
There is a White House press release that is more informative than any of the news articles. From the release: “Current students with loans are eligible for this debt relief. Borrowers who are dependent students will be eligible for relief based on parental income, rather than their own income.” Here is a link to the full press release: FACT SHEET: President Biden Announces Student Loan Relief for Borrowers Who Need It Most | The White House.
There is so much we don’t know. Are loans borrowed between now & December 31 (the end of the repayment freeze) included in the forgiveness (which could be a loophole for current students who haven’t yet borrowed)? The new repayment plan is for undergraduate loans -will graduate loans have a separate repayment amount, and if so, how does that work when a borrower owes both undergraduate & graduate loans? What does this mean: Regarding the new income based repayment plan, “Cover the borrower’s unpaid monthly interest,so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.” That sounds like no interest will accrue during repayment if a student is on an income based repayment plan - I honestly can’t believe that to be the case. If it is, will borrowers who repay on a standard plan also benefit from no interest accrual during repayment? Or does it mean that interest won’t accrue on the difference between the income based & standard payment amounts? This also seems unlikely.
There are lots of questions to be answered, and I am certain that implementation will be problematic. And in the end, what has been done to keep future students from being in the same predicament down the road? Covid didn’t cause the current loan situation.
And I have not seen anything stating that it’s for undergraduate loans only, but I also haven’t seen anything saying that grad loans qualify. The devil is always in the details.
2 Likes
I am not prepared to conclude that current students qualify based on their parents’ income only if they weren’t claimed as a dependent on parent taxes. It’s possible that may be the case, but that’s not actually what the WH press release says (unless I am reading it wrong). The press release says that “Borrowers who are dependent students will be eligible for relief based on parental income, rather than their own income.” As many of us are aware from completing the FAFSA, dependent for financial aid purposes is not the same as dependent for tax purposes. Again, the devil is in the details.
I will check NASFAA’s website tomorrow, as I am sure they are working like crazy right now to get all of these questions answered.
3 Likes
Also 5% loan payments on monthly income plus not incurring interest so your basically paying your principal. This is huge…
5 Likes
I want money back. I’ve paid for everybody else. I need some too.
18 Likes
I think this is fantastic and I’m truly happy for those who will get relief, but I agree with @kelsmom that it doesn’t attack this issue moving forward. I would like to see reforms made to the predatory lending practices around student loans.
6 Likes
But that is puzzling, because unsubsidized loans accrue interest during deferment periods (like while the student is in school). I think we really need to see the deep dive into what is actually going to happen.
1 Like
$10,000 is a drop in the bucket for most. Many scrimped and saved and still had to borrow to afford even public universities. Students going to $300,000 schools probably haven’t had to work at all if their parents were able to save that much.
3 Likes