Will Biden forgive student loan debt?
Ans: President Biden recently provided $1 billion in student loan forgiveness for 72,000 Borrowers. And it looks like a second round of student loan forgiveness might be coming for those in an income-driven repayment plan, borrowers in default and wage garnishment might not be included.
Following the recent announcement about student loan forgiveness Biden has proposed additional rounds of student loan forgiveness including those in income-driven repayment plans. This means that student loan borrowers will have additional rounds of opportunities available to get rid of their student loan debt depending on their situation.
This article will discuss the additional student loan forgiveness options being proposed, how it benefits you, and answer questions you may have.
Student Loan Forgiveness Biden Has Implemented
As soon as Biden entered the office, he issued an executive order extending the pause on student loan payments and interest accrual put in place. Biden has included tax-free student loan forgiveness and cancellation in the new stimulus package, however, how does it affect those in Income-Driven Repayment Plans? Cancelled-debt is subject to income tax according to the current IRS tax code, however, Biden is working on revising this.
Although Biden has not created new student loan forgiveness plans or programs, he has added an additional provision to existing student loan programs. Part of the American Recovery Act recently enacted includes a law guaranteeing all student loan forgiveness will be tax-free until December 31, 2025. Prior to this, ways for tax-free forgiveness and discharges were limited, now tax-free forgiveness will be applied to amounts forgiven after 20 or 25 years.
Here is how you can take advantage of what is already in effect:
- Find ways to pay down your private student loans by speaking with your lender
- Look for forgiveness programs that you may qualify for by contacting your loan servicer
- Find out if consolidating or refinancing your student loans is an option for you and how you will benefit from this.
- Look into making additional payments towards the principal balance of your student loans while the payment and interest pause is in effect.
In this chapter you should have learned:
- The different options that have been made to help borrowers manage student loan debt
- How to take advantage of student loan forgiveness Biden has enforced
- What these different options mean to student loan borrowers and who it affects
The next chapter will touch base on the student loan forgiveness Biden is pushing for, the focus on affordable education, and how this will affect you.
Student Loan Forgiveness Biden Wants
Previously, you learned what Biden and his administration have already put into effect following his inauguration and what this means to you and your student loan debt. Biden’s administration is wanting everyone to have the opportunity to further their education and eliminate their student loan debt.
Now we will discuss what Biden plans for the future to fulfill his focus on making education affordable for everyone and eliminate student loan debt.
Details of the proposals that Biden and his administration has placed on the table:
- Biden supports a blanket cancellation of $10,000 per borrower, while there are other Congress members pushing for $50,000.
- Biden is proposing to revamp the IDR plans by making the monthly payments 5% of discretionary income rather than 10%
- Biden wants to ensure that income below $25,000 is exempt from making student loan payments under the new IDR plan
- The tax-free student loan forgiveness policy will expire in 2025, Biden is pushing to modify this by either extending the date or making it permanent.
Here is what you can do to prepare for changes in IDR plans:
- Take a look at your options for enrolling in IDR plans
- Look into performing community service
Here are the key takeaways you should have gathered from this chapter:
- The debate on the amount that should be implemented for the blanket student loan cancellation proposal
- How Biden is proposing to revamp income-driven repayment plans
- The program that Biden is proposing to introduce for student loan forgiveness
- How these new proposals can benefit and provide relief to student loan borrowers
This short article was intended to inform you of the options you have/will have to eliminate your student loan debt. Your needs, your budget, and your situation will determine what future opportunities are right for you.
To learn more about finding what’s best for you and how to enroll, contact our office today to speak with one of our expert specialists.