These 4 groups of borrowers will qualify for Biden's next round of student loan forgiveness But here are the four groups likely to benefit
The U.S Department of Education is still finalizing its new student loan forgiveness plan
As Biden administration prepares to forgive the student debt of tens of millions of borrowers — a move experts say could happen as soon as October — it has issued new guidance on who will most likely be eligible for the relief.
That's an important distinction from President Joe Biden's first effort at sweeping student loan cancellation: With this attempt, the Education Department revised its forgiveness plan to be more targeted, with the hope that this aid package survives the inevitable next round of legal challenges.
The Department is still working out the details of the plan, and will notify eligible borrowers soon.
"Once these rules are finalized, 30 million Americans will get to benefit and experience the life-changing impact of student debt cancellation," said Aissa Canchola Bañez, policy director at the Student Borrower Protection Center.
These are the four groups who stand to benefit from partial or full debt relief, if the plan survives the inevitable next round of lawsuits.
1. Borrowers who owe more than at start of repayment
Those who hold Direct or other Education Department-held loans and have a current balance greater than when they entered repayment may be able to get up to $20,000 forgiven, according to Department of Education guidance. The amount of relief they'll receive will depend, in part, on how much their balance has grown.
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Experts say the Education Department will likely compare borrowers' present balance to the total principal and interest they owed when they began paying down their debt, whenever that was.
Single individuals enrolled in income-driven repayment plans who earn under $120,000 could get the entire amount on their debt that has grown since they entered repayment, both principal and interest, erased. The income cap for married borrowers who file joint taxes is $240,000.
2. Those already eligible for relief
The Education Department could also forgive the debt of the many borrowers who are eligible for relief but either haven't enrolled in the right program or applied for the aid yet.
Many student loan borrowers aren't aware of the relief options available to them, such as income-driven repayment plans and the Public Service Loan Forgiveness program, consumer advocates say.
3. People who have been paying for many years
If you have only undergraduate student loans and entered repayment on or before July 1, 2005, you will likely be eligible for the aid.
For those with just graduate loans, or a mix of undergraduate and graduate debt, repayment must have begun on or before July 1, 2000, according to the Education Department guidance.
Those who have consolidated their loans along the way shouldn't worry that their timeline reset. The Education Department says it will look into when those underlying loans initially entered repayment.
4. Attendees of troubled schools
In the fall, the Education Department will also likely try to cancel some or all of the debt of those borrowers who attended schools that lost their eligibility for federal funding, suddenly closed or provided "low financial value," the agency said.
This story originally appeared on: CNBC - Author:Annie Nova
