With the new Biden administration in place, student loan borrowers are wondering what this means for their student loan forgiveness options. Is there a government student loan forgiveness program coming in 2023? The answer is yes! President Biden has proposed a plan that would provide free student loan forgiveness on certain government loans. Let’s break down what this could mean for you and your pocketbook come 2023.
The Biden Plan: How it Works
The Biden plan proposes to forgive up to $10,000 of federal student loans held by borrowers who have experienced financial hardship due to the pandemic. This plan would be available for both subsidized and unsubsidized federal student loans, including Direct Loans, Stafford Loans, and PLUS Loans. It would also cover any existing debts from prior years. To be eligible, borrowers must have earned less than $125,000 in 2020.
In addition to providing direct loan forgiveness of up to $10,000 per borrower, the plan also proposes an expansion of income-driven repayment plans (IDR) that can be used to reduce monthly payments and extend term lengths of existing loans. This will allow borrowers with higher incomes or greater debt balances to still benefit from the reduced payment amounts offered by IDRs while still taking advantage of the potential debt forgiveness after a certain number of years depending on their chosen repayment plan.
For those who were able to take advantage of forbearance or deferment during the pandemic, there is good news as well; any missed payments will not count against them when they apply for this program in 2023. That means that even if you haven’t been able to make your monthly payments over the past year or so due to economic hardship, you may still qualify for some amount of debt relief under the Biden plan when it goes into effect in 2023.
It looks like there is light at the end of the tunnel for those struggling with student loan debt! With President Biden’s proposed plan set to go into effect in 2023, there is a chance that qualifying borrowers could receive up to $20,000 in free loan forgiveness and additional assistance through income-driven repayment plans. If you are looking for ways to reduce your debt burden before then, consider refinancing your current loans or researching other private sector debt relief options such as consolidation programs or credit counseling services that might be able to help lower your interest rate and monthly payments until more permanent solutions become available next year. No matter what path you choose moving forward, understanding all possible options now can help save time and money later!
