Many borrowers, while excited about the news, want to know what comes next. The White House said that, in order to benefit, most borrowers will have to submit an application to verify their income. The Education Department said nearly 8 million borrowers already have income information on file, and should qualify to have their debts canceled automatically.
For those 8 million borrowers, that relief may come very soon. And the timetable for those remaining borrowers – some 35 million of them?told NPR’s Mary Louise Kelly“We’re improving a system that was broken and antiquated,” he said, adding that it will take time to make the process run smoothly. Cardona urged borrowers to go to 3. Will my monthly payments go down?
An unexpected part of Biden’s announcement is a revised plan for what is known as income-driven repayment , which are designed to help people who cannot afford to make large monthly payments. Biden’s IDR plan will cut the amount borrowers have to contribute each month – from 10% of their discretionary income to 5%. It will also raise the amount of income that is considered non-discretionary, thus providing more assistance.
While Biden’s loan forgiveness announcement brings immediate relief for many borrowers, Dominique Baker, an associate professor of education policy at Southern Methodist University, says these changes to IDR could bring benefits for years. “When we talk about needing large-scale reform of the student loan system, this would be one of those things,” she said. “This is a good first step.”
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