White House: Nearly 8 million borrowers will have student loans automatically forgiven while some will have to fill out form
PITTSBURGH (KDKA) — One day after President Joe Biden announced $10,000 in student loan forgiveness and other major changes in the federal student loan program, lots of questions about how all this will work.
We asked KDKA-TV money editor Jon Delano to get some answers to the most frequent questions.
College financial aid administrators woke up to many questions from students, families and alumni about the president's loan forgiveness program.
"It's probably one of the most important things that I've seen come through during my career," says Alyssa Dobson, director of financial aid at Slippery Rock University.
She says a top question is, "Do I need to do anything? Is there an application I need to submit?"
The answer from the White House is this.
"About 8 million borrowers across the country won't need to do anything to receive automatic cancellation. The other individuals will probably have to fill out a short form. I promise it will be short," says Rachel Thomas, formerly the U.S. Education Department's top spokesperson and now with the White House.
The form is not yet available, she says, but some 43 million student loan borrowers are affected if they had their loan by July 1 and meet the income requirements.
"If you make less than $125,000 and you have loans, you will be eligible for up to $10,000 in debt cancellation," says Thomas. "If you went to school on a Pell Grant, you are eligible for an additional $10,000 in cancellation, totaling up to $20,000."
Pell Grants are awarded to students with exceptional economic needs, and about 60 percent of federal loan recipients also got Pell Grants.
"Twenty million people will have their entire student debt wiped out," says Thomas.
So what about parents who took out the Parent Plus loans to help pay for their kids' education?
"Those Parent Plus loans, those are eligible for debt cancellation," says Thomas.
Once again, individuals must earn $125,000 or less or families under $250,000 for parent loans to be canceled.
But the president is also making other changes to the nation's student loan program.
"We are also making long-term changes to the student loan program which will help current and future borrowers," says Thomas.
While the loan repayment moratorium for all has been extended through the end of the year, in January the cap on repayments will be reduced from 10 percent of monthly income to five percent.
"We're lowering that cap to five percent. You're only required to pay up to five percent of your income on your student loans monthly."
Another change for current and future students is debt cancellation of small loans if monthly payments are made regularly.
"If you have less than $12,000 in student loan debt altogether, instead of getting your debt canceled after paying for 20 years, you can get your debt canceled after paying just 10 years."
It will also be easier for those who go into public service – from law enforcement to health care to education to the military – to qualify for public service loan forgiveness.
"You can get your debt canceled after 10 years of service," says Thomas.
Of course, everyone wants to know if they are eligible for canceled loan debt.
The eight million who don't have to do anything are those whose income information is already on file with the Education Department.
As for the rest of us, the White House recommends going online to submit an email address to get that loan cancellation form when it becomes available.
