How does Biden’s student loan forgiveness plan affect Pennsylvania borrowers? What to know
Federal student loan borrowers are getting a break after President Joe Biden announced Wednesday a plan to fulfill a long-awaited campaign promise: Cancel up to $10,000 in student debt for millions of Americans.
According to one analysis from online lending marketplace LendingTree, the move will absolve up to 30% of Pennsylvania student borrowers from their debts. That translates to 519,022 federal borrowers in the state.
The president also announced the U.S. Department of Education will forgive up $20,000 in student loans for those with the greatest need, Pell Grant recipients. Reserved for undergraduate students, nearly every Pell Grant recipient comes from a household making less than $60,000 a year, a White House fact sheet said.
The announcement Wednesday came after it was telegraphed in a flurry of media reports and hinted at by the Biden administration, which has repeatedly said the decision would come before the end of August.
That deadline aligns with the end of a pause on monthly student loan payments.
Borrowers to get one more temporary pause on repayment
Under the plan, federal student loan borrowers will get one more break on monthly payments, which have been suspended for two years by the Biden administration because of the pandemic.
This pause will be extended for the remainder of 2022, the administration said, with payments resuming in January 2023.
What does the forgiveness mean for PA borrowers?
In Pennsylvania specifically, LendingTree found as much as 7% of borrowers in the state, or about 122,000 people, owe at least $100,000 in student loans.
But the commonwealth’s borrowers with lower balances would see a much greater benefit. From 2019-20, according to the Institute for College Access and Success, the average debt load of a Pennsylvania college grad was less than $40,000.
During the same timeframe, 64% of Pennsylvania college graduates had student loan debt, placing the state third highest nationally on the measure.
Across the U.S., the move would wipe out student debt completely for as many as 1 in 3 borrowers, or some 13 million people. All told, it would amount to waiving $326.4 billion in debt, according to the LendingTree analysis.
Another 20%, roughly 8 million people, would see their balances cut in half.
Additionally, 21% would be able to shrug off a quarter of their debt, and 18% would see at least 10% of what they owe disappear. A much smaller group, only about 7% nationwide, owe more than $100,000 in student loans. Should Biden take this action, they’d still owe 90% of their balances, according to LendingTree.
How can I check if I’m eligible for debt forgiveness?
According to the U.S. Department of Education, you must meet one of the following criteria:
- To be eligible, your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households)
- If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt cancellation.
- If you did not receive a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt cancellation.
What do I have to do to get my debt canceled?
Nothing, for now. The DOE said the debt will be automatically forgiven. Nearly 8 million borrowers will be able to receive that immediately because the federal government already has their income information.
In the coming weeks, the Biden administration will launch and application enabling borrowers to update their income information, DOE said.
The agency will notify borrowers once applications are open through its email subscription service.
This story was originally published August 23, 2022 at 5:25 PM.