GREENSBORO, N.C. — Student loan forgiveness. Once you open up that subject, it seems to generate one question after another about how it's going to work.
President Biden's plan includes forgiving up to $10,000 in federal student loan debt to any borrower making less than $125,000 a year. It could be up to $20,000 if they have a Pell Grant. Details about how and when you need to apply for forgiveness are trickling out.
Todd asked this question on my Facebook page:
Next year when people take out student loans, do they have to pay them back or will this get thrown on taxpayers forever?
The student loan forgiveness plan is complicated. Todd is in good company with this question. It came up during a White House Daily Briefing. This is part of the briefing from C-SPAN.
“Could someone go out today, and apply for a loan knowing it could be covered?”
“The loans that are eligible for relief are up to June 30th of this year, 2022,” said Susan Rice, White House Domestic Policy Council Director.
Only loans taken out by June 30, 2022, are eligible for forgiveness. So, no, when students take out new loans next year they are not included in this forgiveness plan.
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Here are several other FAQ's:
What does the “up to” in “up to $20,000” or “up to $10,000” mean?
- Your relief is capped at the amount of your outstanding debt.
- For example: If you are eligible for $20,000 in debt relief, but have a balance of $15,000 remaining, you will only receive $15,000 in relief
What do I need to do in order to receive loan forgiveness?
- Nearly 8 million borrowers may be eligible to receive relief automatically because relevant income data is already available to the U.S. Department of Education.
- If the U.S. Department of Education doesn't have your income data, the Administration will launch a simple application which will be available by early October.