A Breakdown on the Biden Administration’s Student Loan Debt Plan

Student Loan Forgiveness

The Biden Administration has made big news, and stirred up a lot of controversy, over their announcement regarding student loans. People getting loans forgiven are happy. People who already paid off their loans aren’t. Both sides are justified in how they feel.

What are the details of the announcement, what does it mean for you now, and what does it mean for the future?

How much will I have forgiven?

If you earn less than $125,000 per year (or $250,000 as a married couple), and you didn’t receive Pell Grants, you will have $10,000 forgiven. If you did receive Pell Grants, you will have $20,000 forgiven.

When will I have to make payments?

The student loan pause has been extended through December 31st, 2022. It is believed that will be the last extension of the pause. Payments will resume on January 1st, 2023.

Will there still be income-based repayment plans?

Yes. The Biden administration is proposing to cap payments at 5% of your monthly income, which is a drop from the current 10%. They also want to address the issue of accrued interest, proposing to cover unpaid monthly interest for people on income-based plans.

When will I see the money?

There will be an application process to qualify for the forgiveness. Borrowers will need to provide their income information. The application is scheduled to be released in the coming weeks after the August 24th announcement.

What Now?

Wherever you stand on the issue, I believe most people can agree on one thing. Forgiving a portion of student loans today doesn’t fix anything if you can go take out a student loan tomorrow. It is crucial to educate young people on their options, and on the reality of student loans, as they are preparing for college.

Wherever you stand on the issue, there is no denying that student loans are a problem. Whether it’s true or not, a lot of young people feel that student loans are they only way they can go to college. It’s hard for an 18-year-old with no income to borrow money to buy a house, but they can easily take out a huge student loan.

Wherever you stand on the issue, the stats are crazy. According to the latest study, borrowers owe $1.7 trillion in student loans. Accrued interest in income-based repayment plans is causing some people to see their balance actually go up over the years.

And finally, wherever you stand on the issue, I hope you understand this main point. You are in charge of your money and your life. If this student loan situation teaches us anything, it should be that we have to take control of our finances.

It’s not too late to take control. If you’re tired of wondering where your money is going, waiting for the government’s decisions to see how it affects you, and stressing about what’s next, you can change that. But you have to want to change that. It takes focus and discipline, but it can be done.

TJ Weir, Aurora Financial Strategies

765-437-4612

2705 S Berkley Rd, Suite 1B

Kokomo IN 46902