Student-Loan Forgiveness: What You Need to Know
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What is the main topic discussed in this episode?
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Here's your money briefing for Thursday, August 25th. I'm J.R. Whalen for The Wall Street Journal. Big news for federal student loan borrowers.
Who qualifies for Biden’s student-loan forgiveness and what are the income limits?
Many are set to have a large portion of their student debt forgiven.
Borrowers with federal student loan debt are eligible for up to $10,000 in relief. The other thing is people who received federal Pell Grants in college will also be eligible for up to $20,000 in forgiveness.
So when might their debt be forgiven? And what do borrowers have to do in the meantime? We'll talk with our personal finance reporter, Julia Carpenter, about it after the break.
How much debt can Pell Grant recipients have canceled under the plan?
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On Wednesday, millions of student loan borrowers finally got the news they've been waiting for from President Biden and will see some or all of their debt forgiven.
I believe my plan is responsible and fair. It focuses the benefit on middle class and working families. It helps both current and future borrowers and will fix a badly broken system.
Are private student loans or Parent PLUS loans included in the forgiveness?
So if you've got unpaid student loans, what do you need to know about the plan? Wall Street Journal personal finance reporter Julia Carpenter has been sorting through the details, and she joins us with more. Hey, Julia, thanks for being with us.
Thank you for having me.
All right. So first of all, Julia, who's eligible to have part of their student loans forgiven?
Borrowers with federal student loan debt are eligible for up to $10,000 in relief if they earn less than $125,000 a year or under $250,000 a year for couples. The other thing is people who received federal Pell Grants in college will also be eligible for up to $20,000 in forgiveness, and Pell Grant recipient graduates hold about $4,500 more in debt than other graduates.
Yeah, and usually Pell Grants are usually awarded only to undergraduate students who have exceptional financial need. Now, how about people with private loans?
So unfortunately, only federal student loan borrowers are eligible for this loan forgiveness.
Okay, so how about Parent PLUS loans, where families borrow money to help a student pay for their education? How do they work into this?
So the forgiveness applies to borrowers of both Parent PLUS and Grad PLUS programs. Families can borrow the total cost of attendance, that's room and board, other expenses.
When will loan payments resume and what is the timing for forgiveness?
And this forgiveness applies to federal loans for both undergraduate and graduate programs, as well as to Parent PLUS loans.
Now, we should also mention that the pause on student loan repayments that's been in place since early in the pandemic, that's also been extended. And now the date that payments are set to resume is December 31st. But I want to ask about the timing for the debt forgiveness. When does that kick in?
The Department of Education says we'll get more details in the next few weeks, but the timing's a little unclear right now. We know that this will definitely happen before student loan payments are set to resume in January 2023.
Okay, so what does a borrower have to do to take advantage of the forgiveness?
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:00–0:43
2
Who qualifies for Biden’s student-loan forgiveness and what are the income limits?
0:43–1:08
3
How much debt can Pell Grant recipients have canceled under the plan?
1:08–2:06
4
Are private student loans or Parent PLUS loans included in the forgiveness?
2:06–3:15
5
When will loan payments resume and what is the timing for forgiveness?
3:15–3:55
6
What do borrowers need to do now to receive forgiveness and how can they avoid scams?
3:55–5:44
7
Will forgiven student debt be treated as taxable income?
5:44–5:55
8
What legal and political challenges could block or delay the forgiveness plan?
5:55–6:17
Speakers
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