(CNN) — President Joe Biden announced Wednesday Your plan to tackle student loan debtThis includes loan forgiveness for certain borrowers and extension of pandemic-related payment freezes.
The Biden administration has already waived $32 billion of the $1.6 trillion debt by expanding forgiveness programs for public sector workers, disabled borrowers and students defrauded by colleges for financial gain.
CNN has compiled details about Biden’s new plan, including how much will be forgiven and who is eligible.
Who is eligible?
This program applies to borrowers or borrowers of federal student loans.
How much financial relief will they get?
The amount of loan forgiven depends on whether the borrower has received A Bell Grant Join college. According to the Office of Federal Aid, federal Pell Grants are awarded only to college students who “demonstrate exceptional financial need and are not pursuing a bachelor’s, graduate or professional degree.” For Students of the Faculty of Education (FSA, its abbreviation in English).
Borrowers making less than $125,000 a year and married couples or heads of household making less than $250,000 a year can have up to $10,000 of their federal student loans forgiven if they do not receive a Pell Grant as a college student. According to the FSA website.
Borrowers making less than $125,000 a year and married couples or heads of household earning less than $250,000 a year, but who received a Pell Grant as a college student, have up to $20,000 in student loan forgiveness.
What steps should eligible borrowers take?
Around 8 million borrowers can automatically get loan forgiveness because the Department for Education already has their income information, the FSA says.
The Biden administration will begin asking borrowers to provide their income information in the coming weeks. The FSA says the application will be available before the federal student loan payment freeze ends on Dec. 31.
Borrowers can register to receive notifications about when the application opens On the subscription page of the Education Department.
How will future payments on the remaining loan work?
Student loan repayments will be frozen until December 31, 2022, and payments will begin in January 2023.
The government is proposing a rule to create a new income-based repayment plan so borrowers can pay no more than 5% of their monthly income on college loans, down from the current 10% cap.
The rule would also increase the amount of income considered “unreasonable income” so that no borrower earning less than 225% of the federal poverty level would have to make monthly payments.
Borrowers with outstanding balances of $12,000 or less would have their balances forgiven after 10 years of payments, instead of the current 20-year mark, under the proposed new income-based repayment plan.
Under the proposed rule, to prevent the borrower’s credit balance from growing when the individual makes monthly payments, the Biden administration would cover unpaid monthly interest even if the monthly payment is $0 due to the borrower’s income level.
CNN’s Katie Lobosco contributed to this report.
