The Biden-Harris Student Debt Relief Plan

By The Retirement Dude  /  September 6, 2022

On August 24, 2022, President Biden along with Vice President Harris and The Department of Education announced a program to assist student loan borrowers in the short term and long term.

Student Loan Repayment Pause

The Administration will extend the pause of repayment of student loans for the final time through December 31, 2022, with payments resuming in January 2023.  You do not need to do anything for the pause to take place; your student loan service provider should do this automatically.

Student Loan Debt Relief

  • Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for households.
  • If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt cancellation.  www.studentaid.gov
  • If you did not receive a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt cancellation.
  • Your relief is capped at the amount of your outstanding debt.
  • The  Administration and the U.S. Department of Ed will launch a simple application which will be available by early October.  www.ed.gov/subscriptions
  • Borrowers are being advised to apply before November 15th, 2022  in order to receive relief before the payment pause expires on December 31, 2022.
  • Anticipated relief within 4-6 weeks after submission of a completed application.
  • Applications will be processed as they are received, even after the pause expires on December 31, 2022.

Proposed Changes to Student Debt

Also being proposed for student debt are repayment rules based on income, which have long existed within The U.S. Department of Education.

  • Borrowers would not  be required to pay more than 5% of their discretionary income each month on undergraduate loans
  • Raise the amount of income that is considered non-discretionary income,, guaranteeing that no borrower earning under 225% of the federal poverty https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines
  • Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
  • Cover the borrower’s unpaid monthly interest, so that 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.

As with any new program changes, deadlines and updates will occur.  At DWG we recommend you sign up for updates on this program and check to see what type of student loans you or loved ones used while attending college.

If you have any questions please do not hesitate to reach out!

 Contact: Mark Minder, RFCⓇ, MBA

https://dardenwealth.com/meet-the-team/mark-minder

 DWG (Darden Wealth Group) does not give tax or legal advice. This information is for informative purposes only and does not constitute advice. Please consult your financial advisor for information specific to your situation.