(NEXSTAR) – The Biden administration has announced its plan to cancel some of America’s $1.6 trillion in federal student loan debt, fulfilling a campaign promise after months of anticipation.
While the White House says 43 million borrowers can expect to receive relief – roughly 20 million of those are expected to have their remaining federal student loan balance completely erased – that means approximately 2 million borrowers won’t receive any relief.
It’s possible you are among those borrowers who won’t see relief for a number of reasons.
First, if your student loans aren’t federal loans and are instead through a private lender, your loans won’t be forgiven through President Biden’s plan. Private loans don’t fall under the jurisdiction of the federal government, meaning the federal government most likely cannot forgive them.
The “targeted student debt cancellation” revealed Wednesday is intended to help “borrowers at highest risk of delinquencies or default once payments resume,” the Education Department said in a release.
Student loan forgiveness based on income
“No high-income individual or high-income household – in the top 5% of incomes – will benefit from this action,” the White House said Wednesday.
As expected, student loan forgiveness will be restricted based on income. Borrowers “with annual income during the pandemic of under $125,000 (for individuals) or under $250,000 (for married couples or heads of households)” will be eligible for up to $10,000 in relief, according to the U.S. Department of Education.
Borrowers under the same income caps who received a Pell Grant in college will be eligible for up to $20,000 in debt cancellation.
If your annual income exceeds either income threshold, you won’t qualify for the relief outlined by the Biden administration.
How that relief will be distributed has not yet been made clear.
In a Wednesday release, the Education Department says further details will be announced in the coming weeks. An application will need to be filed and, according to officials, that will be available before the student loan payment pause ends on December 31.
Income data already available to the Department of Education shows nearly 8 million borrowers may qualify for student relief automatically.
Additional details about this student loan forgiveness are expected in the coming weeks, and President Biden is scheduled to deliver remarks about the decision Wednesday afternoon.
In addition to student loan forgiveness, the Biden administration extended the payment pause on loans until the end of 2022, proposed a new rule to change to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers, and proposed long-term changes to the Public Service Loan Forgiveness program.