Biden would cancel federal student loans, see how 2:56
(CNN) --
President Joe Biden on Wednesday announced his plan to address student loan debt, which includes debt forgiveness for certain borrowers and an extension of the pandemic-related payment freeze.
The Biden administration has already written off nearly $32 billion of the $1.6 trillion in outstanding federal student debt by expanding existing forgiveness programs for public sector workers, disabled borrowers and students who were swindled by colleges for financial gain. profit.
Biden announces student loan relief for borrowers making less than $125,000 a year
Here are the details CNN has compiled about Biden's new plan, including how much will be forgiven and who is eligible.
Who qualifies?
The plan applies to borrowers or debtors of federal student loans.
How much financial relief will they get?
The amount of debt forgiven depends on whether the borrower received a Pell Grant to attend college.
A federal Pell Grant is only awarded to college students who "show exceptional financial need and have not earned a bachelor's, graduate, or professional degree" and "does not have to be repaid, except in certain circumstances," according to the Federal Aid office. for Students (FSA, for its acronym in English) of the Department of Education.
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Single borrowers making less than $125,000 a year and married couples or heads of households making less than $250,000 a year will have up to $10,000 of their federal student loan debt forgiven if they did not receive a Pell Grant as a college student, according to the FSA website.
Single borrowers making less than $125,000 a year and married couples or heads of households making less than $250,000 a year but who received a Pell Grant as a college student will have up to $20,000 of their debt forgiven. student loan.
What steps must eligible borrowers take?
Nearly 8 million borrowers can automatically receive debt forgiveness because the Department of Education already has their income information, the FSA says.
The Biden administration will launch a request in the coming weeks for borrowers to provide their income information or if borrowers are unsure if the department has their income information.
FSA says the application will be available before the federal student loan payment freeze ends on Dec. 31.
Borrowers can sign up for updates on when the application opens on the Department of Education's subscription page.
How will future payments on the remaining debt work?
Student loan repayment will be frozen again until December 31, 2022, with payments beginning in January 2023.
The government is also proposing a rule to create a new income-based repayment plan so borrowers pay no more than 5% of their monthly income on college loans, down from the current 10% threshold.
The rule would also increase the amount of income that is considered "nondiscretionary income," so that no borrower earning less than 225% of the federal poverty level will have to make a monthly payment.
For borrowers with loan balances of $12,000 or less, loan balances would be forgiven after 10 years of payments instead of the current 20-year mark, under the proposed new income-based repayment plan.
And to help prevent a borrower's loan balance from rising while the individual is making monthly payments, under the proposed rule, the Biden administration would cover unpaid monthly interest, even if the monthly payment is $0 due to the level of borrower's income.
CNN's Katie Lobosco contributed to this report.
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