3 things know about Biden student loan write-off plan: NPR

President Biden announcement of a massive attempt to pardon the federal student loan debt – up up to $20,000 for Pell grant recipients and up up to $10,000 for other who qualify – leaves millions of borrowers with unanswered questions and some of details won’t be clear for weeks or months.

Here are three big Questions borrowers may have:

1. Who will receive loan forgiveness?

Americans currently owe about $1.62 trillion. in federal student loans. Biden’s plan will bring relief to the majority of of them – 43 million borrowers – and completely erase student debt of about 20 million.

But who fits?

Individuals with federal student loans who earning less than $125,000 per year, or couples earning less than $250,000, qualify for up up to $10,000 in forgiveness.

This includes current Students: Borrowers who dependent students will be eligible for relief based on them parents’ income. Parent PLUS loans that are federal loans for parents of undergraduate students are also right according to the presidential plan. (loans taken out after June 30, 2022 there will be no qualify.)

Qualified Borrowers who received Pell grants are eligible for additional relief – up up to $20,000.

Approximately 60% of federal student Borrowers of the loan received Pell grants, according to the White House. These grants designed to help low income students pay for higher education and about a third of students with federal student loans receive Pell Grants each year.

2. Should I apply?

Many borrowers, excited news, want to know what comes next. The White House stated that in To benefit, most borrowers will have to apply to verify their income. The Department of Education announced almost 8 million borrowers already have an income information on file and should qualify so that their debts are written off automatically.

For these 8 million borrowers, this relief can be very soon. And timetable for the remaining borrowers – about 35 million. of them?

“It’s a million dollar question,” Education Secretary Miguel Cardona told NPR’s Mary Louise Kelly.

“We are improving system it was broken and obsolete,” he said, adding that it would take time to make this process run smoothly. Cardona urged borrowers to go to https://studentaid.gov/debt-relief-announcement/ for more information and to sign up for automatic emails that will provide updates.

3. Will my monthly payments go through down?

unexpected part of Biden announcement revised plan for what is known as income-driven repayment (IDR), which designed to help people who cannot afford to make large monthly payments.

Biden’s IDR plan will cut amount borrowers must make a monthly installment – from 10% of their discretionary income up to 5%. So be it also raise amount of income that is considered non-discretionary, which provides more help.

While Biden’s loan forgiveness announcement brings immediate relief for many borrowers, Dominic Baker, partner professor of education policy at Southern Methodist University, says these changes to the RDE can benefit for years. “When we talk about the need for large-scale reform of in student loan systemthat would be one of these things,” she said. – It good first step.”