Here are details CNN has learned about Biden’s new plan, including how much will be forgiven and who is eligible.
The plan applies to borrowers of federal student loans.
How much forgiveness will they get?
Single borrowers making less than $125,000 a year and married couples or heads of households making less than $250,000 a year but who received a Pell Grant as a college student will have up to $20,000 of their student loan debt forgiven.
What steps must eligible borrowers take?
Nearly 8 million borrowers can automatically receive debt forgiveness because the Department of Education already has their income information, the FSA says.
The Biden administration will launch a request in the coming weeks for borrowers to provide their income information or if borrowers are unsure if the department already has their income information. The app will be available in early October, a senior administration official told CNN. After a borrower completes the application, the person can expect student loan relief within four to six weeks, the official also said.
To receive notification when the application is open, borrowers can register at studentaid.gov.
FSA says the application will be available before the federal student loan repayment pause ends on December 31. Borrowers are encouraged to apply by November 15 to receive relief before the payment break expires, but the Department of Education will continue to process applications even after that. the pause expires, the official said.
How will future payments on the remaining debt work?
Student loan repayment will be paused again until December 31, 2022, with payments beginning in January 2023.
The rule would also increase the amount of income that is considered “nondiscretionary income,” so that no borrower earning less than 225% of the federal poverty level will have to make a monthly payment.
For borrowers with loan balances of $12,000 or less, loan balances would be forgiven after 10 years of payments instead of the current 20-year mark, under the proposed new income-based repayment plan.
And to help prevent a borrower’s loan balance from rising while the person is making monthly payments, under the proposed rule, the Biden administration would cover unpaid monthly interest, even if the monthly payment is $0 due to income level. of the borrower.
This story has been updated with additional information.
