This week, President Biden announced a multi-faceted plan to reduce student debt that many nurses and healthcare workers will directly benefit from. Most notably,the debt forgiveness plan forgives $10,000 each for borrowers who earn less than $125,000 per year. Pell Grant recipients are eligible for $20,000 of student loan relief.
The Biden administration is also proposing changes to income-driven repayment plans. Borrowers will pay no more than 5% of their monthly income toward undergraduate loans — a decrease from the 10% limit.
This debt forgiveness plan drastically reduces monthly payments for many nurses. For example, a nurse making $77,000 a year could reduce their monthly payment on their undergraduate loan from about $300 per month to about $60 a month, according to the Department of Education (ED).
Additionally, the Biden administration plans to extend the pause on federal student loan repayment one final time until the end of the year (Dec. 31, 2022.)
Do I Qualify For Student Debt Forgiveness?
The type of loan you have determines if you qualify for debt forgiveness. The following loans are eligible for debt forgiveness:
- Direct subsidized and unsubsidized federal student loans
- Direct Stafford Loans
- Parent Plus Loans
- Grad Loans
It is not yet clear if borrowers with commercially held Federal Family Education (FFEL) loans qualify for Biden student loan forgiveness.
The plan provides relief for about 43 million borrowers and cancels the full balances for almost half those borrowers. This alleviates financial pressure from the majority of federal student loan-holders making under $125,000.
When Will Student Debt Forgiveness Come Into Effect?
The exact timeline is still unclear. However, the Biden administration says it will release an application in the coming weeks, prior to the federal student loan repayment pause that ends on December 31.
Borrowers can sign up for notifications when new information comes out.
Nurses With Pell Grant Receive Higher Debt Relief
Pell Grant recipients will be eligible for double the relief. The ED estimates that about 27 million borrowers will be eligible to receive up to $20,000.
Pell Grant holders often have exceptional financial circumstances. Almost all of them come from families that earn less than $60,000 per year.
If you are unsure if you received a Pell Grant, you can check your status by visiting studentaid.gov and logging into your account with your credentials.
Student Debt Forgiveness FAQ
What’s the first thing I need to do if I qualify?
Sign up for notifications to receive further instructions as soon as they come out. According to the ED, more information will become available in coming weeks.
How do I prove that I qualify?
You should not need to prove that you qualify. The ED will be able to determine who received a qualifying loan or grant.
When will payments for the outstanding balance restart?
If you receive debt forgiveness from these new changes, your new balance will calculate and your revised payments will be reinstated at the beginning of 2023.