US President Joe Biden this week unveiled a plan that would eliminate between $10,000 and $20,000 in student loan debt for borrowers across the country.
Mr Biden said his long-awaited plan would “provide more breathing room” for people struggling to pay off student loans. The White House estimates that 45 million borrowers have accumulated $1.6 trillion in debt.
The average tuition for public, four-year universities in the US from 2020-21 cost $9,400. That number exceeds $37,000 per year for private, non-profit institutions, the National Centre for Education Statistics reported.
If the plan survives the probable legal challenges to come, it could wipe out student debt for 20 million people, Mr Biden said.
Who is eligible?
People who are single and have an income of under $125,000 qualify for the $10,000 student loan debt elimination. Those who are married and have a joint income of under $250,000 will also be eligible.
Eligibility is based on adjusted gross income and only federal student loan debt is eligible.
People who received a Pell Grant and do not exceed the income threshold will be eligible to have up to $20,000 in student loan debt cancelled.
Pell Grants, which generally do not have to be repaid, are reserved for university students with the most significant financial need. About 27 million Pell Grant recipients are eligible for loan forgiveness.
Students currently enrolled in university will qualify for the debt relief measure if their loans were issued before July 1 and if their parents earn less than $250,000 per year. The plan does not apply to future university students.
How do you apply?
Some people will not need to apply for the student loan debt relief because the US Department of Education has income data for a small portion of borrowers. Others will need to prove their incomes via an application process.
Applications will be available before the end of the year, officials said.