On Wednesday, August 24, United States President Joe Biden announced a student debt relief plan that will include canceling anywhere between $10,000 and $20,000.
The University of Wyoming Financial Aid office responded with the following statement when asked how this might affect current students and alumni.
With the announcement of the debt relief plan, we will be looking to the Department of Education for additional guidance and strongly recommend any federal student loan borrowers who believe they are eligible to visit: https://studentaid.gov/debt-relief-announcement/. Here you will find an option to sign up on the Department of Education subscription page, to be notified when the process has officially opened. We will continue to evaluate and estimate the impact for our students, as able.
For loan holders to be eligible for up to $10,000 in forgiveness, an individual must make less than $125,000 or less than $250,000 for married couples and households.
It is noted in the White House ‘FACT SHEET’ posted about the new debt relief plan that if an individual borrower is dependent, their eligibility status will be based on parental income rather than their own.
One other eligibility adjustment is if an individual was a Pell Grant recipient, in which they are eligible to have up to $20,000 forgiven.
While eligibility qualifications are based on income, they are also limited to a specified time period.
The Institute of Student Loan Advisors highlighted that loans that have not been disbursed by June 30, 2022, will not be eligible for loan forgiveness.
According to the UW Fact Book 2022, approximately 57% of first-time undergraduate students leave with $0 in student loan debt, the other half of students leave with an average of $23,592.
Information from the Education Data Initiative shows that the state of Wyoming has an average of 7,545 Pell Grant recipients, averaging $3,908 per student.
This data, along with any relevant income data collected by the U.S. Department of Education will help in the automatic cancellation of an estimated eight million borrowers nationwide.
“We estimate that 75% of them are going to take advantage of the relief that they are offered. And if that debt is canceled, that means that you know, if they were scheduled to make $400 worth of payments a year for the next 10 years, that cash flow is no longer going to come into the government,” Bharat Ramamurti, Director of the National Economic Council of the United States, said in a press release on Wednesday.
Individuals who may not have submitted their income information to the U.S. Department of Education will have the opportunity to do so as the application becomes available in October.
The Biden Administration also extended the pause on federal loan payments to December 31, 2022.
“If we turn the loans back on without making any — any other changes, roughly speaking — because things have changed in the world in the last two years — roughly speaking, we would expect to collect about $4 billion a month in addition to what we’re collecting right now. Right? So, roughly speaking, $48 billion coming into the government that wouldn’t have been coming in before,” Ramamurti said.
