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| Ⓒ Provided by WPDE Myrtle Beach/Florence |
By Simon Williams, WPDE Myrtle Beach/Florence
President Joe Biden announced a plan to cancel student loan debt for some 40-million borrowers, and while it still has a long way to go, there are a lot of questions from borrowers if it does become official.
There are up to 735,000 student loan borrowers in the state of South Carolina, adding up to billions of dollars in student debt.
More than half of those people are younger than 35, and many of them still owe up to $40,000.
Below is a simple explanation of who would get the relief, how much money could be cancelled, and additional help that would assist future borrowers, according to the plan released by the White House.
Read More: How to Pay Off Student Loans Fast
Who Qualifies For The Relief?
Anyone who has federal student loans would qualify, even if that person did not earn a degree.If someone previously had federal student loans, but refinanced those loans with a private lender, that person would not qualify under the plan.
If someone is currently in college, that person would only qualify if they already have taken out student loans, but the plan would not cancel any loans that have not been taken out yet.
How Much Money Would Be Canceled?
For a borrower who is single, and earns less than $125,000 a year, the maximum is $10,000 off of student loan debt.For a borrower who files joint taxes, the household income would need to be below $250,000 a year for the relief.
Is There A Limit?
There is a cap on how much would be canceled, based on how much debt someone has.That means if someone only has $7,000 in student loan debt, that is how much would be canceled. There is no credit for any future loans a borrower would take out.
Read More: When student loans become your midlife crisis
What About Future Borrowers, Or The Amount Left Over On My Loan?
For anyone taking out loans in the future, or anyone paying the amount left after the relief is canceled, the Biden Administration's plan proposes to reform how much that person would need to pay back each month.For undergraduate loans, the monthly payment would be 5% of their discretionary income, instead of the current 10% rule.
The plan would also raise that income amount, meaning someone making about $15 an hour or less would not have to make a monthly payment.
The plan also coverers a borrowers unpaid interest, so the loan balance would not grow, as long as the borrower meets the minimum monthly payment, even if that payment is $0 a month.
If the original loan balance is $12,000 or less, the entire loan balance would be forgiven after 10 years, instead of the current 20 year rule.
What Should I Do To Get The Relief?
The relief would be automatic, but if the Department of Education does not have your income data, or if you're not sure, the Biden Administration will launch an application, and said that application will be available before student loan repayment begins again, on December 31.Because of the American Rescue Plan, this debt relief would not be treated as taxable income for the federal income tax purposes, according to the plan.
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