President Joe Biden and his administration announced on August 24th, 2022, that they will be forgiving $10,000 of direct federal student debt for eligible individuals. The plan also temporarily expands eligibility for public service loan forgiveness, and permanently expands the scope of income-based repayment schemes. Furthermore, as part of this plan, the current pause on student loan repayment since the onset of the COVID-19 pandemic will be extended one final time until December 31st of this year. Payments will resume in January 2023 at an unspecified date. 

Under the Biden-Harris plan, individuals who make less than $125,000 a year will be viable for the cancellation process. For married couples or heads of household, the annual income threshold is $250,000. Federal Pell Grant recipients who meet the income threshold will be eligible for up to $20,000 dollars in debt cancellation from the new forgiveness plan, instead of just up to $10,000. 

The Department of Education has announced it will be releasing an application in the coming weeks to help borrowers determine eligibility and apply for relief under the program. The application will be available until the pause on federal loans concludes at the end of the year. 

In addition to the above, individuals who have worked in a public service, defined as a federal, state, local, tribal government, or a qualifying non-profit organization, for at least ten years may be eligible to have all outstanding student debt cancelled. This will be allowed for those who have made 120 payments and are working full-time in the eligible fields. Enrollments for this program will only be open until October 31st, 2022. 

In an effort to prevent loan forgiveness from creating a feedback loop of spiraling tuition costs, the Biden-Harris plan also includes a number of measures designed to make the loan system overall more affordable and accessible for both current and future borrowers. These measures include new rules at the Department of Education which would expand income-based repayment, including limits for interest rates going forward. 

More details regarding the above programs will be available in coming weeks. Note that at time of writing, parts of the federal student aid website are “experiencing a high volume of visitors” and cannot be reached.