President Joe Biden announced on Wednesday that college graduates can get up to $20,000 in student loan forgiveness.
More than half of Texas college graduates had student loan debt as of 2020, according to The Institute for College Access & Success.
About 45 million Americans are weighed down by nearly $1.7 trillion in student loan debt, according to the Federal Reserve’s estimates.
Roughly $120 billion of that belongs to Texans, with the average debt owed at nearly $33,000, according to the Education Data Initiative.
The total cost of both four-year public and private colleges has nearly tripled since 1980, but federal support hasn’t kept up, according to a White House press release. Pell grants once covered nearly 80% of a student’s college costs, but now only cover a third.
We rounded up what Texans need to know about Biden’s plan.
How does the loan forgiveness plan work?
In order to qualify for $10,000 in loan forgiveness, Texans must earn less than $125,000 or be part of a household making less than $250,000.
Pell grant recipients qualify for an additional $10,000 of debt forgiveness — or up to $20,000 total.
The U.S. Department of Education is creating a “simple application process for borrowers to claim relief” that will be available before the end of the year when the repayment pause ends.
Nearly 8 million borrowers may be eligible for automatic relief because relevant income data is already available, according to the White House’s press release.
Biden’s plan also aims to lower monthly payments on existing loans.
The U.S. Department of Education is proposing cutting monthly payments for undergraduate loans in half. The proposal would forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with original loan balances of less than $12,000. It would include covering borrowers’ unpaid monthly interest so that loan balances don’t grow as long as monthly payments were made.
Meanwhile, teachers can find extra help through an existing Public Service Loan Forgiveness program. The U.S. Department of Education is holding a webinar explaining how to apply for the help next Wednesday.
The education department announced time-limited changes to its Public Service Loan Forgiveness Program, which make it easier for eligible Americans to get their outstanding debt forgiven.
Public servants — such as government employees, teachers, healthcare workers and police — are encouraged to visit the PSLF website to learn if they qualify and apply before the temporary changes end on Oct. 31.
How long are college repayments paused for?
Biden extended the student loan repayment pause through the end of the year.
In March 2020, former President Donald J. Trump paused student loan payments as the pandemic ravaged the U.S. economy.
Collections stopped for most federal borrowers for more than two years after the pause was extended six times. The Biden administration’s most recent extension would have restarted such loan payments on Sept. 1.
The DMN Education Lab deepens the coverage and conversation about urgent education issues critical to the future of North Texas.
The DMN Education Lab is a community-funded journalism initiative, with support from The Beck Group, Bobby and Lottye Lyle, Communities Foundation of Texas, The Dallas Foundation, Dallas Regional Chamber, Deedie Rose, Garrett and Cecilia Boone, The Meadows Foundation, The Murrell Foundation, Solutions Journalism Network, Southern Methodist University, Todd A. Williams Family Foundation and the University of Texas at Dallas. The Dallas Morning News retains full editorial control of the Education Lab’s journalism.
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