Although President Joe Biden has only been in office for about two months, he has already pushed through massive legislative changes. Millions of Americans received thousands of dollars in stimulus money because of Biden. And now, an estimated 230,000 people will be able to wave goodbye to some of their student debt as Biden looks to have the government forgive a whopping $1.3 billion in student loans to hundreds of thousands of borrowers.
For some of these benefit recipients, it is the second time they will have their student debt wiped out by Biden. However, these former students did not accurately provide salary information, so the debt had come back. Nevertheless, workers are eager to have some of their student debt forgiven so they can have lower expenses every month and focus on building a future rather than paying back the education of their past.
Biden has already put a pause on student loan payments and has prevented interest from accumulating on those balances until the end of September. He hopes that this new wave of forgiveness will go toward students who are in need. He hopes they will “receive support and protection during the COVID-19 emergency.”
According to information from the Department of Education, not everyone will qualify for this wave of relief. This time around, students who will get some of their debt forgiven are totally and permanently disabled. These people will also be expected to provide three years of income documentation to prove that they qualify for the debt forgiveness. This will also help show decision-makers that these people are still in need of relief.
For borrowers who had their loans reinstated, the Government Accountability Office found that most of these people had failed to provide all of the necessary paperwork for forgiveness. This time around, they are given another chance to get it right so they can benefit from having debt wiped away under President Biden. This financial freedom can help Americans spend more, save more, or focus on paying back other debts that might be harming their financial lives.
“Borrowers with total and permanent disabilities should focus on their well-being, not put their health on the line to submit earnings information during the COVID-19 emergency,” says Education Secretary Miguel Cardona, in a news release issued this week.
This second wave of student debt relief comes after Biden’s White House pushed through $1 billion in debt forgiveness for borrowers whose schools had ripped them off or deceived them, like former students of Trump University.
Although Biden has already fulfilled his promise of lowering student debt, he hopes to do more in the coming years. Members of Congress want Biden to forgive as much as $50,000 per student, but he does not know if it is possible to forgive more than $10,000.
Lawmakers did offer more support to students in the recent coronavirus relief package – the same Biden bill that gave millions of Americans $1,400 stimulus checks. A provision in the piece of legislation indicated that forgiven student debt would be tax-free until 2026. Typically, forgiven debts are taxed like income.
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