President Joe Biden’s student loan forgiveness program aims to provide up to $10,000 in student debt cancellation for millions of Americans.
Up to 50% of Michigan residents with federal student debt will have their loans cut in half or forgiven entirely through student loan forgiveness, according to state officials.
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The decision is expected to benefit up to 1.4 million Michigan residents who have federal student loans. According to state officials, 30% of residents with federal loans, approximately 420,000 people, owe less than $10,000 and this would forgive all of their debt.
Around 50% of Michiganders with federal student debt, approximately 700,000 people, owe less than $20,000, and their debt would be cut in half or forgiven entirely. Nearly 700,000 more Michiganders will receive important loan relief.
Find out if you qualify below:
Who qualifies?
The forgiveness plan applies to federal student loan borrowers.
You are eligible if your individual income is less than $125,000 per year. For married couples, that maximum is $250,000 annually.
“No high-income individual or high-income household -- in the top 5% of incomes -- will benefit from this action,” the White House said.
According to the New York Times, eligibility will be based on your adjusted gross income. Income figures from either 2020 or 2021 can render you eligible, but 2022 income will not. Loans obtained after June 30 are not eligible for relief, according to the report.
“Adjusted Gross Income (AGI) is defined as gross income minus adjustments to income. Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income. Adjustments to Income include such items as Educator expenses, Student loan interest, Alimony payments or contributions to a retirement account. Your AGI will never be more than your Gross Total Income on you return and in some cases may be lower,” according to the IRS.
Read: Will Michiganders have to pay income tax on forgiven federal student loan debt?
How much money will you get?
The amount of debt canceled depends on if the borrower received a Pell grant to attend college.
The Department of Education will provide up to $10,000 in debt cancellation to non-Pell Grant recipients.
Borrowers who did receive a Pell grant will get up to $20,000 in debt cancellation.
Read: Did you receive a Pell grant? Here’s how to check
Do you have to apply?
The Department of Education is expected to set up an application process for eligible borrowers to claim relief.
The application will be available before the end of the year. According to the White House, nearly 8 million borrowers may be eligible to receive the relief automatically because their relevant income data is already available to the department.
Read: How the new income-driven repayment plan for federal student loans would work
When will repayments resume?
The pause of federal student loan repayment was extended for a final time through Dec. 31, 2022. You should expect to resume making payments on student loan debt in January 2023.
Read: Did you make payments on federal student loans during the COVID pandemic? Here’s how to get a refund