For a lot of Americans, paying off their student loan debt is nothing short of a dream, and unfortunately, that’s about as true as can be, considering a vast majority of them will probably stay indebted for the rest of their lives.
However, things don’t have to be that way, and regardless of how much you needed the education, it doesn’t mean you should suffer financially for years to come, which is exactly where these cancellations come in.
Before you get too excited, it’s important to fully understand how these cancellations work, and what you can do moving forward.
This article will go over the many intricacies that go into Joe Biden’s latest plan to waive certain borrowers’ student loan debt and how the process itself works.
Will the government be canceling loans?
If you’re looking for a short and easy answer to this question, we can safely tell you that SOME loans will be canceled, although this only applies to qualifying borrowers’ loans.
In fact, this has been known for quite a long time, as Joe Biden made the announcement regarding student loan debt cancellations all the way back in August last year.
One could argue that the promises he’d made during his campaign were what led him to take on such a difficult task, although it’s not a battle he’ll be fighting on his own.
In order to help with the process, Biden also instated a pause on federal student loan payments, increasing the amount of time some former students have to overcome the immense price of education.
With this in mind, the extension lasted up until December 31st, 2022.
On top of this, Biden announced he’ll be preparing a brand-new income-driven repayment system, which would cap the monthly payments at around 5% of the person’s known income.
This is a major change, especially considering that all the current loaning plans offer payments that average around 10% instead.
Can you qualify for this?
Despite the many common misconceptions regarding these cancellations, your status as a student won’t count towards much, at least not as much as your current income level.
The amount of income you’ve got every month is crucial if you’re looking to receive a loan cancellation, and single filers will have to have under $125k/year, whereas joint filers will need to have under $250k.
Anyone who can find themselves within these limitations can receive up to $10k in student debt relief, and the past 2 years will be used as reference points for a person’s income level.
Of course, dependent students will have their eligibility measured according to their parent’s income rather than their own.
However, those that do actually qualify for this option as well as something like a Pell Grant, could potentially be looking at $20k in loan relief.
As it stands, there will still be those that won’t be receiving this support, and this applies to members of private schools, as the relief is only available to those that borrowed federal student loans.
Making the most of this opportunity
If you’re looking to get your student loan forgiven, the best way to start your search would be through the application available on studentaid.gov, although you will have to submit some personal data like your DOB, name, and social security number as well as your current e-mail address and a valid phone number that those conducting the investigation can use to contact you.
Apart from the standard formalities, you may also have to provide proof of being eligible for loan forgiveness.
A decision on the matter of someone’s eligibility for loan forgiveness can take up to six weeks for you to receive an answer, and even that is optimistically speaking.
If you were looking to make use of the relief, you may already be too late, considering the final date to submit your application was December 31st, and if you’re late to the party, it may be time to start worrying about how to pay back that debt.
How many will benefit from this
A study has shown that around 45 million of us are already in at least one form of debt, and most of it is due to the student loans we’ve taken on.
Despite this, the White House has continuously shouted the same words, and now they’re claiming that up to 43 million Americans could finally feel a change for once in their lives.
The White House is also planning on fully forgiving the loan balances of certain outstanding students.
However, this forgiveness is much different from the $25B that former college-goers received.
By doing this, Biden practically fully forgave billions of dollars to qualifying borrowers.
Additionally, the new forgiveness program will also affect those with short-lasting or permanent disabilities.
Final word
Education is crucial if you’re looking to live a comfortable life further down the line, and while it may come at a steep cost, student loans have made it possible for just about anyone to attain a college-level education.
However, this loan is often overlooked and ignored until it’s already too late, and it’s why so many Americans have a hard time making ends meet, as they’re forced to keep making their monthly payments, up until they simply can’t anymore.
This support option may help relieve hundreds of thousands of Americans, so long as they’re eligible for student loan forgiveness.