What Is the Student Loan Forgiveness Income Limit?
President Joe Biden announced an expansion on student loan forgiveness on Aug. 24. A fact sheet provided by the White House indicates that Americans can expect wide-scale cancellations of up to $20,000 in student loan debt — though not everyone will qualify.
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Higher income earners will likely be ineligible for the announced student loan forgiveness initiative. The Biden administration has laid out income thresholds of $125,000 for each individual carrying student loan debt (or $250,000 for married couples). Those borrowers who received a Pell Grant will be eligible for up to $20,000 in student loan debt cancellation, and those borrowers who were not recipients of a Pell Grant could receive up to $10,000 in student loan debt cancellation.
Why an Income Threshold on Biden’s Student Loan Debt Cancellation?
Analysts in favor of an income threshold attached to the Biden administration’s planned debt relief (and student loan debt cancellation more broadly) may make the argument that higher earners can better afford to pay off their student loan debt than lower income earners, and that student loan cancellation may not be as necessary to offer to higher earning Americans.
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Political commentators in support might also suggest that limiting student loan forgiveness to lower income households preemptively squashes the argument that the Biden administration is distributing wealth to those who are already well off — and also suggest that this debt relief could address some racial disparities in terms of the broader economy, per The New York Times.
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