Everything you need to know about student loan forgiveness.
With Present Biden set to make his announcement on student loan forgiveness any day, millennials and Gen Z have a lot of questions on what that could mean for them. Here, we break down what student loan forgiveness means and what it’s probably going to end up looking like for you.
1. Student Loan Forgiveness Could Change A Generation
Depending on how much you owe, wide-scale student loan forgiveness could literally change the life of a generation of students. If the president would cancel $50,000-worth of loans for students, for example, approximately 36 million people would have their student loans completely paid off.
Unfortunately, it isn’t looking like Biden is going to cancel that amount, despite pressure from Democrats for months. The President has consistently supported cancelling $10,000-worth of student loans, which is still a substantial amount of money.
2. Don’t Expect A Check If Your Loans Are Cancelled
If President Biden does decide to cancel $10,000 of student loans for everyone who owes, it’s not going to be in the form of a stimulus check, a la the pandemic. The government would simply automatically reduce the amount you owe by $10,000. You won’t receive a lump sum payment, but rather a lower monthly payment on your student loans.
3. You May Not Qualify For Student Loan Forgiveness
Unfortunately, according to leaked documents from the U.S. Department of Education, student loan forgiveness could only be limited to federal loans. That means if you received a private loan, you aren’t eligible. The proposed plan would include people with Direct Loans, FFELP Loans, Perkins Loans, Parent PLUS Loans, and Grad PLUS Loans.
President Biden is also considering an income limit when it comes to loan eligibility, too—$150,000 individuals and $250,000 for families. If your income is more than this, you likely won’t qualify.
4. Wide-Scale Student Loan Forgiveness Probably Won’t Ever Happen Again
Future students, take note. If President Biden does decide to cancel any amount of student loans, it probably won’t happen a second time. The wide-scale loan cancellation will be a one-time event.
It is worth noting, however, that the President is scheduled to make an announcement soon on whether he is going to extend the student loan payment pause for the seventh time. Most experts agree that he will likely extend it until the end of 2022, but you’re going to need to have a game plan in place whenever those loan payments start coming due again.
Ready for more ways to save money as a student? Check out how you can go to law school for free, or why you need to know this date when it comes to getting money for college.