President Biden’s new student loan debt policy includes canceling up to $20,000 worth of federal student loans for many borrowers. Here are some key points from the program:
- Eligibility is based on adjusted gross income from either 2020 or 2021
- Only loans obtained before June 30, 2022 are eligible
- Only federal student loan debt is eligible, including federal parent PLUS loans
- Degree completion has no bearing on eligibility
- Single individuals earning less than $125,000/yr. will qualify for $10,000 in debt cancelation
- Those who are married and file jointly, or are head of a household, qualify for $10,000 in debt cancelation if their income is less than $250,000/yr.
- Pell Grant recipients who meet income requirements could qualify for an additional $10,000 in cancelation
- Loans that are in default are still eligible, and those who have debt left after the cancelation process will be once again current and able to enroll in a repayment plan
Those who qualify for the program should contact their loan servicer to learn more about the required next steps or whether cancelation will happen automatically. You will not have to pay federal taxes on the canceled debt.
To learn more about this program, along with other proposed rules that may affect it, see these additional articles: