With news of President Joe Biden’s student loan forgiveness plan, in which up to $20,000 of student federal loan debt may be forgiven, many likely have questions about eligibility.
, which was expected to bring immediate debt cancellation for at least 40,000 borrowers and help millions of others lower their debt.
The program was created in 1994 as a way to provide a safety net for people who struggle to repay student loans. The program now offers five repayment options that provide reduced monthly payments based on income and family size. The borrower’s remaining balance is supposed to be automatically forgiven after 20 or 25 years, depending on the plan.
Out of the more than $1 trillion in student debt held by the federal government, about half is being repaid through those plans.
. Benefits include interest rate caps under the Servicemembers Civil Relief Act and Department of Defense student loan repayment programs. Closed School Discharge If a school closes while the borrower is enrolled or soon after they withdraw, the individual may be eligible for discharge of federal student loans — or "the removal of your obligation to repay your loan under certain circumstances," the Education Department says.
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