President Biden, back in the White House today after an extended vacation, has announced that his administration will forgive up to $20,000 in student loans for many students and up to $10,000 for anyone making below an income threshold.
The forgiveness would apply to individuals who earned less than than $125,000 last year, or, if you filed married filing jointly, less than $250,000.
According to the White House, for the purposes of the immediate debt relief, a borrower’s income in either 2020 or 2021 tax year is assessed. If their income was below the cap in either year, they would be eligible.
Also according to a fact sheet distributed by the White House, loans must originate before July 1 2022 to qualify.
Students who received a Pell Grant would be eligible for up to $20,000 in loan forgiveness.
Pell Grants are awarded by the U.S. Department of Education to help eligible low-income students pay for college costs, including tuition, fees, room and board, and other educational expenses. They are typically given directly to the school and do not have to be repaid.
According to the U.S. Department of Education estimates, roughly 27 million borrowers will be eligible to receive up to $20,000 in relief – including thousands of Lakewood residents.
In addition, the White House will extend the moratorium on monthly payments and interest for a “final time” through December 31.
“In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023,” the president tweeted this morning.
Biden will detail his plans in a speech at 2:15 from the White House.
According to some reports, the White House will also tout a plan to create a more generous income-driven repayment plan which will cut monthly payments in half for undergraduate student loan borrowers.
The president, who campaigned on eliminating at least some student debt, has been considering this plan of action for months, and faced heavy pressure from progressives in his party to take even more drastic action.
It is important to note that this debt relief will not be treated as taxable income for the federal income tax purposes.