Most federal student loans will qualify for forgiveness, White House says

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President Biden’s detailed plan raises a key question: Who qualifies for loan forgiveness?


Most federal student loans will qualify for forgiveness, White House says

President Joe Biden announces a new student loan forgiveness plan in the Roosevelt Room of the White House in Washington on Wednesday. Photo by Bonnie Cash/UPI | License Photo

President Joe Biden’s move to cancel some student loan debt for millions of Americans has been hailed by many advocates and former students seeking relief, but borrowers must meet certain criteria to qualify for forgiveness.

Biden unveiled the three-part plan on Wednesday after weeks of mulling over the issue. A legion of borrowers and advocates have been after the president for months to help them get out from under what can often be crippling school debts. The new plan has been praised by some as a good measure of relief — and criticized by others who say it also gives relief to higher-income Americans who can afford to repay their loans.

The detailed plan and its list of requirements raise a key question: Who qualifies for loan forgiveness?

There’s an income restriction. Borrowers cannot earn more than $125,000 per year, or households $250,000. Forgiveness is also limited to federal loans.

Further, students who received a Pell Grant in college will be eligible for up to $20,000 in debt cancellation. Borrowers who meet income standards but did not receive a Pell Grant are eligible for up to $10,000 in relief.

The White House says it will launch an application website in the coming weeks for borrowers to submit their income qualifications. About 8 million former students who qualify will automatically see relief because the Education Department already has their income information.

“Earning a college degree or certificate should give every person in America a leg up in securing a bright future,” Education Secretary Miguel Cardona said in a statement Wednesday. “But for too many people, student loan debt has hindered their ability to achieve their dreams — including buying a home, starting a business, or providing for their family.

“Getting an education should set us free; not strap us down. We’re delivering targeted relief that will help ensure borrowers are not placed in a worse position financially because of the pandemic and restore trust in a system that should be creating opportunity, not a debt trap.”

Most federal student loans will qualify for forgiveness, White House says

The White House says more than 45 million borrowers hold $1.6 trillion in federal student loan debt — and as many as 43 million of them will qualify for the new loan forgiveness plan. File Photo by Jim Ruymen/UPI

The plan also includes a cap so that borrowers will not have to pay more than a certain amount of their discretionary income on loans each month, which could help former students with routine payments.

Biden’s administration has already canceled more than $30 billion in student debt by expanding forgiveness programs to public workers, disabled students and those who were defrauded by predatory for-profit colleges.

Dominique Baker, associate professor of education policy at Southern Methodist University, said Biden’s plan, however, should not end reforming the country’s student loan system.

“When we talk about needing large-scale reform of the student loan system, this would be one of those things,” Baker told NPR. “This is a good first step.”

Biden on Wednesday also extended the pause in repaying student loans. The pause was introduced after the COVID-19 crisis arrived in the United States to help individuals and families struggling in a depressed economy.

The pause was scheduled to expire on Aug. 31, but Biden extended the expiration date through Dec. 31, meaning payments will again become due in January.

Biden’s announcement on Wednesday led to a rush of traffic to two websites connected to student loans — the Education Department’s Federal Student Aid website and the website for Nelnet, one of the main providers of federal student loans. The department’s site crashed for a while due to the high traffic. also experienced high traffic following Biden’s announcement.

The White House said that more than 45 million borrowers hold $1.6 trillion in federal student loan debt. Biden’s plan estimates that as many as 43 million of those borrowers will qualify for loan forgiveness — and almost half of those former students will have their balances wiped out entirely.

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