Student Debt

43 Million People Are Now Eligible For Student Loan Relief — Are You One Of Them?

The Biden administration finally released details on their student debt forgiveness plan, and 20 million people will have their student loan debt cancelled entirely. Here’s what else you need to know.

Originally Published: 
A protestor with a mask on and a hat holds a sign that says "Cancel Student Debt"
Jemal Countess/Getty Images Entertainment/Getty Images

President Joe Biden made a major announcement today, August 24th, 2022, regarding student loan forgiveness. After campaigning on a platform of debt forgiveness, the administration has been dealing with the student loan crisis in fits and starts. But now, Biden has officially announced he will cancel $10,000 in student loan debt per borrower who makes under $125,000 a year.

Biden also announced that he would cancel up to $20,000 in student loans for those who received the Pell Grant under that income limit, and that he would extend the student loan payment pause one final time, through December 31, 2022. Nearly 75% of borrowers who receive Pell Grants, which are awarded based on financial need, are Black, and 60% of borrowers have Pell Grants.

The Department of Education says that “nearly 8 million borrowers may be eligible to receive relief automatically because relevant income data is already available to the Department.” In a one-sheet provided by the White House regarding the announcement, the White House estimates that the changes will “provide relief to up to 43 million borrowers, including cancelling the full remaining balance for roughly 20 million borrowers.”

The Department of Education also announced two major proposed rule changes that some experts believe are actually more of a big deal than the broad debt cancellation.

There could be major changes to the Income Driven Repayment (IDR) program “that will substantially reduce future monthly payments for lower- and middle-income borrowers.” This includes:

  • Those who have undergraduate loans can have their monthly repayment capped at 5% of their monthly discretionary income, down from 10%.
  • Borrowers with both undergraduate and graduate loans will pay a “weighted average rate” of their income.
  • The rule would raise the amount of income considered “nondiscretionary” and protect that income from repayment requirements. This could guarantee that no borrower making less than 225% of the federal poverty level (or a 15% minimum wage, per one estimate) will have to make a monthly payment.
  • The rule would forgive loan balances after 10 years of repayments, not 20, under IDR plans for borrowers with “original loan balances of $12,000 or less.”
  • The rule would “fully cover the borrower’s unpaid monthly interest” so that a loan balance will not grow as long as borrowers make consistent, required monthly payments.

“The problem of interest is huge, particularly interest that has been capitalized — meaning that it has been added to a borrower’s principal balance and that interest accrues on interest. Many borrowers — especially those in [income-driven-repayment plans] are underwater on their loans because of outstanding and capitalized interest,” explained Persis Yu, the Policy Director & Managing Counsel at the Student Borrower Protection Center, to Fatherly ahead of Biden’s announcement. “The Department of Education has some proposals that will stop capitalized interest going forward. As it is working on a new IDR plan, we urge the Department to ensure that borrowers do not see their loan balances balloon.”

The Department of Education also announced proposals to make long-term changes to the Public Service Loan Forgiveness (PSLF) program, including:

  • allowing more types of payments to qualify for PSLF, such as “partial, lump sum, and late payments;”
  • allowing certain deferments and forbearances (like for those in Peace Corps, AmeriCorps, National Guard, and the military) to also qualify for PSLF

The expected announcement — with a few surprises — comes after the Biden Administration has already canceled more than $32 billion in student debt for close to 1.6 million borrowers. The President also extended pandemic-era payment pauses on student loans several times, allowing Americans to hold on to some much-needed cash during a time of record high inflation and economic instability.

Now we know that those earning more than $125,000 will not qualify for loan forgiveness, despite many Republicans’ claims that loan forgiveness will primarily benefit high-income college graduates. However, the amount of debt that will be cancelled is smaller than many advocates had hoped for. Yet a $10,000 to $20,000 forgiveness will still provide an unprecedented benefit for millions of Americans, and restructuring IDR plans will be huge for low- and middle-income earners after college.

“If Biden cancels $10,000 of student loans with a $125,000 income cap, millions of borrowers are going to — for the first time ever — see their debts completely wiped out. For those borrowers, especially those who were in default on their loans, being relieved of this debt will be life-changing,” Persis Yu, the Policy Director & Managing Counsel at the Student Borrower Protection Center, explained to Fatherly before Biden’s announcement. “Biden would be telling student loan borrowers that he understands, better than any other president, that our student loan system is too broken to continue with business as usual.”

But, and there is a big caveat, per Yu: “Even such sweeping action is not enough to end the national student loan crisis. Millions of borrowers, in particular low-income borrowers and borrowers of color who typically must take on more debt to get an education and are more likely to struggle to repay that debt, will remain trapped in debt.” She referred to the cancellation as a “down payment.”

Forgiveness of $10,000 per borrower will zero out student loan balances for some borrowers but is a drop in the metaphorical $1.6 trillion student loan bucket, especially for Black and low-income borrowers, who typically need to borrow more money than others to complete their education. The average student loan debt carried by borrowers today is close to $30,000.

It’s estimated that more than 75% of current student loan borrowers are not paying anything toward their principal balance — the actual dollar amount they borrowed to attend college. Instead, their monthly payments are going solely to interest and fees, effectively increasing the debt amount without paying down the amount the interest is being collected on.

In Biden’s initial student debt cancellation announcement — in the form of an infographic tweet — he noted he would share more details later in the afternoon of August 24th, 2022. Jeff Stein, a Washington Post reporter, has noted rumors that more debt cancellation details could be fleshed out: that graduate debt could be included in the debt forgiveness plan, and that Parent Plus loans, which keep millions of parents trapped in a cycle of student debt they can never repay, could also be included.

This is a developing story. Check back here for updates.

This article was originally published on