After months of back and forth and anticipation, the Biden Administration finally released its loan cancellation plan today.
The centerpiece of the plan calls for the cancellation of $10,000 in student loan debt for single borrowers with an income of less than $125,000. At the same time, it would allow those borrowers with an income of less than $125,000 who were also Pell Grant recipients during college to cancel $20,000 of student loan debt.
In addition, the current moratorium on student loan repayments would be extended through the end of this year, for the last time. Loan repayments would restart in January of next year.
The Administration is also proposing to create a new income-driven repayment plan, one that would cap repayments at 5 percent of a borrower’s discretionary income (lowered from the current cap of 10 percent). The plan calls for further changes to the Public Service Loan Forgiveness plan as well.
Furthermore, the Department of Education plans to publish a list of institutions that it views as saddling students with unreasonable debt levels and it would also require such institutions to provide improvement plans.
A press release about the Administration’s plan from the Department of Education is available here.
Many of the details will still need to be worked out.