President Joseph Biden announced on Aug. 24 a massive student loan relief plan. Most notably, he issued an order allowing for the discharge of $10,000 in federal loans for individuals earning $125,000 or less and married couples earning $250,000 or less. Pell Grant recipients are eligible for $20,000 in loan forgiveness. The executive order could face legal challenges in court. President Biden also further extended the pause of federal student loan repayment and interest accrual one last time, through Dec. 31.
Finally, the Department of Education plans to issue a proposed rule to cut in half the amount that undergraduates must pay back each month from 10 percent to 5 percent. The rule is expected to raise the amount of income considered “nondiscretionary,” protecting such funds from repayment, and forgive borrowers with original loan balances of $12,000 or less after 10 years of payments, rather than 20. And the administration plans to cover borrowers’ unpaid monthly interest so that – unlike other existing income-driven repayment plans – no loan balance will grow as long as recipients make their monthly payments. The U.S. Department of Education has published an FAQ webpage on the proposed plan with more information expected in the coming weeks.
