President Joe Biden announced a plan Wednesday morning to provide some student loan relief for American families.
While many people will see $10,000 of federal student loans forgiven, some borrowers will be eligible for a higher amount of aid.
If you went to college on a Pell Grant and are making less than $125,000 a year, you may be able to wipe $20,000 out from your student loan debt.
Read more Ed Lab: Student loan forgiveness ‘huge relief’ for some Alabama graduates.
Biden’s plan, if approved, would extend a pause on student loans until the end of the year, and would provide a few different avenues for additional loan forgiveness.
How much are you making?
Forgiveness only applies to those earning less than $125,000. If you make more than that, however, you may still be able to pay less toward your loans each month.
The plan also allows borrowers with undergraduate loans to cap repayment at 5% of their monthly income. If your monthly income is $3,000, for example, you can expect to pay no more than $150 a month in student loans when payments resume.
What kind of aid did you receive in college?
Borrowers who did not receive Pell Grants are eligible for $10,000 in loan forgiveness, while Pell Grant recipients will be eligible for $20,000 in forgiveness.
Pell Grants are a form of federal financial aid awarded to undergraduate students who have exceptional financial need. To check the status of your Pell Grant eligibility, current students should log into FAFSA.gov.
Pell Grants are tied to a family’s expected family contribution. Typically, an Alabama student may receive a few thousand dollars in Pell awards per year, over four years.
When do I have to start repaying my loans?
Loan repayments were previously set to resume on Aug. 31, after pausing during the pandemic. Biden’s plan would extend that pause through Dec. 31, 2022.
The White House is expected to provide further details on the plan Wednesday afternoon.
How many people are helped?
Each year, roughly one-third of Alabama undergraduate students are Pell Grant recipients.
More than 31% of Alabama residents – roughly 187,397 people - who owe federal student loans would see that debt wiped out if the Biden administration moves forward with $10,000 in loan forgiveness.
Here’s some state data:
- $23.5 billion in federal student loan debt comes from Alabama.
- $37,137 is the average student loan debt in Alabama.
- 632,800 Alabama residents have student loan debt.
- 50.3% of them are under the age of 35.
- 12.6% of Alabama residents owe student loan debt.
- Among the state’s indebted student borrowers, 16% owe less than $5,000.
- 20.9% owe $20,000 to $40,000 (average $28,669).
- 2.1% owe more than $200,000.