In an attempt to provide relief to student loan debt borrowers, the White House has announced debt cancellation of $39 billion. “Today, we are taking another historic step by forgiving $39 billion in student loan debt for 804,000 borrowers who have been paying down their debts for 20 years or more and should qualify for relief.” reads a statement from Vice President Kamala Harris on additional student loan forgiveness.
The Biden administration announced that 800,000 borrowers will have their loan balances erased as part of a program to address the past errors of loan providers. The Education Department will inform the borrowers when they reach the debt cancellation threshold post which they will not be required to repay loans.
Who qualifies for student loan forgiveness?
Student loan borrowers under Federal Family Education Loan, borrowers with parent PLUS loans or any loan held by Education Department are likely to be considered for cancellation. However, debt cancellation applies only if the borrower has reached a certain threshold. This means the borrower should have been in repayment for 240 to 300 months in a standard repayment plan or income-driven repayment system. The Education Department said it will inform the borrower if they qualify for cancellation of debt. Emails will be sent to the borrowers and debt discharge will begin 30 days after the emails are sent.
Rising cost of education and stagnant federal support
According to an analysis by Education Department, an undergraduate student with loans now graduates with nearly $25,000 in debt. Since 1980, the cost of four year public and four year private college has tripled. But the Federal support has not gone up in the same pace. As a result, the total Federal loan totals more than $1.6 trillion owned by over 43 million borrowers. Majortiy of these borrowers come from low and middle income families.