What we know (and don't know) about Biden's student loan plan

What we know (and don't know) about Biden's student loan plan

President Joe Biden is set to announce that up to $10,000 in federal student loan debt can be canceled for many Americans.

NEW YORK CITY – President Joe Biden is set to announce Wednesday that up to $10,000 in federal student loan debt can be canceled for many Americans. The plan's details are still being worked out, but here's what we know so far and what it implies for those who have outstanding student loans:

WILL BIDEN REFUND STUDENT LOANS?

According to three sources familiar with the idea, it will eliminate up to $10,000 in student loan debt for everyone earning less than $125,000 per year. They talked on the condition of anonymity in order to discuss the plan's elements before it is made public. Some borrowers may be eligible for additional assistance, although this was still being studied.

THE STUDENT LOAN PAYMENT FREEZE WILL BE EXTENDED?

According to the same sources, the moratorium on student loan payments would be extended until January. 

The freeze began in 2020 as a method to assist those who were struggling financially during the COVID-19 epidemic, and it has since been extended multiple times. Its current expiration date is August 31.

 Until repayments begin, interest rates will stay at 0%. People who were overdue on payments prior to the outbreak will be automatically reinstated under a previous extension given in April.

WHO WILL BE ELIGIBLE FOR STUDENT LOAN FORGIVING?

Details have yet to be released, but only persons earning less than $125,000 per year are believed to be eligible. People who borrowed via most federal student loan programs are likely to be eligible, however those who borrowed through private banks or institutions are unlikely to be.

HOW DO I SUBMIT AN APPLICATION FOR STUDENT LOAN FORGIVENESS?

Details have not yet been disclosed, but further information is expected later Wednesday.

HOW MANY PEOPLE WILL BE HELPED BY THIS?

Approximately 43 million Americans have federal student debt, with one-third owing less than $10,000. The majority owing less than $20,000. More than $1.6 trillion in federal student debt exists. Nearly one-third of all American students borrow money to pay for college, with the average individual student debt expected to hit a record high of $37,014 in 2021.

WILL I SEE RELIEF IF I'VE ALREADY PAID OFF MY STUDENT LOANS?

The loan forgiveness is only intended to apply to people who already have school debt.

WILL STUDENT LOAN FORGIVENESS CERTAINLY OCCUR?

Critics predict the White House will be sued over the idea since Congress has never explicitly granted the president the right to eliminate debt. We don't yet know how this will affect the timeline for student loan forgiveness.

In Washington, Seung Min Kim, Michael Balsamo, Chris Megerian, and Zeke Miller contributed reporting.

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