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President Biden announced the following three-part plan to address student loan debt

September 1, 2022

May provide federal student loan borrowers with debt relief

  • Final extension of student loan repayment/interest pause as part of The CARES Act.
    • Repayment and interest accrual will resume on JANUARY 1, 2023.
  • Targets debt relief to low- and middle-income borrowers.
    • Up to $10,000 in debt cancellation for federal loans first disbursed prior to 7/1/22 ($20,000 if you were a Pell Grant recipient as an undergraduate) if AGI was less than $125,000 in 2020/2021 ($250,000 if joint tax return) – may need to apply for benefit – stay tuned for more information.
  • Creates a new, more affordable Income-Driven Repayment (IDR) plan.
    • Payments will be based on 5% of discretionary income for UG loans; 10% of discretionary income on graduate/professional loans (proportionate if you have combination of UG and Grad loans).
    • Increases poverty guideline threshold from 150% to 225% when calculating “discretionary income.”
    • Forgiveness will be reduced from 20 years to 10 years if loan balance is $12,000 or less.
    • Monthly accrued interest that is not paid by the IDR payment will be paid by ED)