What happens next after President Biden’s student loan announcement?

WASHINGTON — Millions of Americans wake up with less debt today after President Biden authorized a limited student loan forgiveness.

So who is eligible? When will debt relief be credited to your account and how much will it all cost taxpayers?

AMOUNT FORGIVEN

$10,000 was authorized to be pardoned by President Biden.

However, only Americans with federal student loan debt who earn below a certain income threshold are eligible. Private loans are not eligible for forgiveness.

If you file your taxes as an individual and earn less than $125,000 per year, you qualify.

Couples who file their taxes jointly are eligible if they earn less than $250,000. Each partner would be eligible for a rebate of $10,000.

The Ministry of Education is working on setting up an online application so you can claim your relief over the next few weeks.

If you were a Pell grantee in college — typically given to students from families earning less than $60,000 a year — you’re eligible for an additional $10,000 in additional rebate.

Current college students with federal loans are also eligible.

CRITICAL

However, the president faces a backlash for the move. There is no help for Americans who have already paid off their debt on their own.

Conservatives say this pardon will make inflation worse. Many progressives think the president could have canceled even more debt.

“It’s complicated and there’s a lot of money involved,” said Tax Foundation analyst Will McBride.

His concern? It will cost taxpayers and the deficit.

McBride says the president recently signed new legislation that cut the deficit by $300 billion. The pardon will cost taxpayers more than $200 billion.

“We just passed something called the Inflation Reduction Act last week, and the whole argument about how it will reduce inflation is that it will reduce deficits, McBride said.

The pause in student loan repayments has cost taxpayers an estimated $120 billion. The pause for the rest of the year will cause this figure to be even higher.

This is not the end of the student loan debate. Expect President Biden’s order to face legal challenges — challenges that could take years.

WHEN WILL PAYMENTS START?

If your debt has not been cleared by forgiveness, you will soon have a student loan refund.

Americans haven’t paid federal student loans since March 2020, but payments will resume in January.

Monthly payments will be lower this time around though.

For Americans on income-based repayment plans, payments will only be 5% of the borrower’s monthly salary. Right now it’s 10%.

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