This means that the average annual student loan payment will be lowered by more than $1,000 for both current and future borrowers. The Department of Education is proposing a new income-driven repayment plan that protects more low-income borrowers from making any payments and caps monthly payments for undergraduate loans at 5% of a borrower’s discretionary income-half of the rate that borrowers must pay now under most existing plans. Cutting monthly payments in half for undergraduate loans.Make the student loan system more manageable for current and future borrowers by:.Borrowers should expect to resume payment in January 2023. To ensure a smooth transition to repayment and prevent unnecessary defaults, the pause on federal student loan repayment will be extended one final time through December 31, 2022. No high-income individual or high-income household – in the top 5% of incomes – will benefit from this action. Borrowers are eligible for this relief if their individual income is less than $125,000 ($250,000 for married couples). The Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients. Provide targeted debt relief to address the financial harms of the pandemic, fulfilling the President’s campaign commitment.The President is announcing that the Department of Education will: This plan offers targeted debt relief as part of a comprehensive effort to address the burden of growing college costs and make the student loan system more manageable for working families. Today, President Biden is announcing a three-part plan to provide more breathing room to America’s working families as they continue to recover from the strains associated with the COVID-19 pandemic. Twenty years after first enrolling in school, the typical Black borrower who started college in the 1995-96 school year still owed 95% of their original student debt. The student debt burden also falls disproportionately on Black borrowers. About 16% of borrowers are in default – including nearly a third of senior citizens with student debt – which can result in the government garnishing a borrower’s wages or lowering a borrower’s credit score. Many of these students could not complete their degree because the cost of attendance was too high. Nearly one-third of borrowers have debt but no degree, according to an analysis by the Department of Education of a recent cohort of undergraduates. Middle-class borrowers struggle with high monthly payments and ballooning balances that make it harder for them to build wealth, like buying homes, putting away money for retirement, and starting small businesses.įor the most vulnerable borrowers, the effects of debt are even more crushing. The skyrocketing cumulative federal student loan debt-$1.6 trillion and rising for more than 45 million borrowers-is a significant burden on America’s middle class. According to a Department of Education analysis, the typical undergraduate student with loans now graduates with nearly $25,000 in debt. That has left many students from low- and middle-income families with no choice but to borrow if they want to get a degree. Federal support has not kept up: Pell Grants once covered nearly 80 percent of the cost of a four-year public college degree for students from working families, but now only cover a third. Since 1980, the total cost of both four-year public and four-year private college has nearly tripled, even after accounting for inflation. Today, the Biden Administration is following through on that promise and providing families breathing room as they prepare to start re-paying loans after the economic crisis brought on by the pandemic. During the campaign, he promised to provide student debt relief. President Biden believes that a post-high school education should be a ticket to a middle-class life, but for too many, the cost of borrowing for college is a lifelong burden that deprives them of that opportunity. Get Involved Show submenu for “Get Involved””Ī three-part plan delivers on President Biden’s promise to cancel $10,000 of student debt for low- to middle-income borrowers.The White House Show submenu for “The White House””.Office of the United States Trade Representative.Office of Science and Technology Policy.Executive Offices Show submenu for “Executive Offices””.Administration Show submenu for “Administration””.
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