How will officials calculate who qualifies for federal student loan forgiveness?
President Joe Biden’s student loan forgiveness program aims to provide up to $10,000 in federal student debt cancellation for millions of Americans.
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The forgiveness plan applies to federal student loan borrowers only. You are eligible if your individual income is less than $125,000 per year. For married couples, that maximum is $250,000 annually.
The New York Times reports that “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.” The report also said that student loans obtained after June 30 are not eligible for relief.
Read more: Do you qualify for Biden’s student loan forgiveness plan?
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.
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.
Read: Will Michiganders have to pay income tax on forgiven federal student loan debt?
The federal government’s student loan repayment pause that was issued during the pandemic is set to expire at the end of December. Americans with student loan debt are expected to resume making payments in January.
Biden announced a new income-driven repayment plan for borrowers, and explained how it changes the current system.
According to the White House, the new plan will allow low- and middle-income borrowers to have smaller and more manageable monthly payments. It will cap the amount borrowers pay each month based on a percentage of their discretionary income, which is the money a person has left over after paying their taxes and other necessary cost-of-living expenses.
Read: How the new income-driven repayment plan for federal student loans would work