TEXAS, USA — About six weeks ago, we reported it was likely that by the end of this month, President Joe Biden was expected to cancel a significant chunk of student loan debt, probably about $10,000 per borrower. That and more became a reality last week. So, what effect will it have and how do you know what to do next if you have student debt?
First off, according to the New York Fed, 1,205,100 Texans have less than $10,000 in school loan debt. It’s expected that many of them will have their balances totally erased by this. But again, that and more came a step closer to reality.
Here’s the ‘more’: Another 782,800 Texans have between $10,000 and $20,000 of student debt. A number of these people could be made student debt free as well because if they received a Pell Grant, the Biden forgiveness plan makes them eligible for up to $20,000 in debt cancellation.
Also, 1,654,300 Texans have more than $20,000 in school debt, and some of them have a lot more. Many of these people could see up to $20,000 knocked off their balances, too.
You qualify for loan forgiveness if your individual income is less than $125,000 or if your total household income is less than $250,000. In some higher-earning states, those amounts may disqualify more borrowers than here in Texas. One estimate says that only 6.35% of all Texas households make more than $250,000.
Who will this affect?
A lot of times we might assume the people who will benefit from this forgiveness are college students or recent graduates. But the balances are actually following people through their lives.
According to the New York Fed, the largest student debt balance is owed by people 30-39 years old. They have a collective balance of $515.59 billion. And people over 50 actually owe more in student loans ($358.51 billion) than people under 30 ($355.55 billion).
Whatever your age, if you owe on federal student loans, payments are now paused through the end of this year.
Details on forgiveness
Right now, here is all the info on the new forgiveness plan. More details are expected in the weeks ahead. In the meantime, you can sign up to get automatic updates about what is happening and what you may need to do.