Posted on 08/24/22
| News Source: WSJ
President Biden’s student-loan plan will reduce or wipe out the debt of millions of borrowers.
The plan eliminates up to $10,000 in federal-loan debt for individual borrowers with annual incomes of under $125,000 or couples who earn less than $250,000. Many borrowers will be eligible for total forgiveness up to $20,000 if they received Pell Grants, a form of federal financial aid awarded to students from low-income households.
The plan is expected to benefit the majority of the more than 43 million people in the U.S. who hold a total of $1.6 trillion in student-loan debt.
“We’re in unprecedented territory,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance. “This has never been done before.”
In addition to the loan forgiveness, the president will also be extending the pandemic-era student-loan pause on payments and interest through the end of the year. The measure began in March 2020 and has been repeatedly extended since. The Federal Reserve Bank of New York estimates the pause spared borrowers nearly $200 billion in payments during this period.