A considerable percentage of middle-class Americans suffer from the curse of student debt. Education is necessary for a job, yet the education itself is so costly that students end up in debt even before their career begins.
The cumulative federal student loan debt has reached over a trillion dollars, with more than 45 million borrowers. With inflation, gas prices, and skyrocketing prices, middle-class citizens are already tired of their situation, but the debt adds a whole new level of struggle.
Building wealth, buying homes, starting a business, or even putting away money for retirement is unthinkable in situations like these. The effects of debt are more crushing than you realize. Nearly one-third of students with debt leave the degree they had pursued in the beginning.
In a dire time as this, President Biden has announced a plan to provide Americans more breathing room as they struggle with debt.
Did Joe Biden Forgive Student Debt?
The Biden administration has forgiven $39 billion in student debt for 804,000 borrowers. For income-driven repayment plans, borrowers get their remaining debt canceled after they have made payments for 20 to 25 years, depending on the loan and plan type and date of borrowing.
U.S. Secretary of Education Miguel Cardona stated, “For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness.”
Persis Yu, the deputy executive director at the Student Borrower Protection Center, is of the opinion that forgiveness was long overdue for borrowers. ″[M]ake no mistake — over 804,000 people are receiving relief with this action because of 804,000 failures — and this is only the tip of the iceberg.”
President Joe Biden’s previous plan to offer the loan forgiveness plan to 37 million people was recently turned down by the Supreme Court, following which he announced that he would come up with other ways to reduce the amount of debt.
Are You Eligible for Student Debt Forgiveness?
President Joe Biden has announced loan forgiveness for hundreds of thousands of borrowers, but how would you know if you are eligible for the forgiveness? Here’s everything you can do to check if you are eligible or not.
- Joe Biden is reinvigorating a pre-existing loan forgiveness plan where loans are canceled after 240 or 300 monthly payments. According to the new rules, payments that were late, partial, or deferred will also count towards forgiveness.
- The above change applies to those who have an income-driven repayment plan, which means those with payment plans adjusted based on family size, income, or others.
- If you belong to the above group, then you can add up the number of monthly payments you have made and the late, deferred, or partial payments.
- However, borrowers will also have to consider their specific repayment plans and the loan that they took.
- Lastly, the Department of Education will contact and notify anyone whose loans will be forgiven.
When will the Loan Forgiveness Take Effect?
The Loan Forgiveness will take effect immediately. The Department of Education will inform borrowers if they have made enough payments to allow for cancellation, and no actions will be needed on the part of borrowers.
Debt discharges will begin thirty days after emails are sent. The borrower’s loan servicer will inform the parties when it’s completed.
You will probably not be able to access your updated payment count for a while, as the loan servicers are still waiting for the Education Department to process and update the numbers.
The President’s debt relief measures will definitely bring consolation to thousands of families and millions of borrowers in the future as they will be free of crippling debt.
So what do you think of the loan forgiveness policy? Tell us in the comments below.
