Last week, President Biden announced a three-part plan to extend the student loan repayment pause one final time, cancel up to $20,000 of student loan debt for eligible borrowers, and “make the student loan system more manageable” for current and future borrowers.
The plan specifically includes:
- Canceling up to $20,000 of student loan debt for Pell Grant recipients and up to $10,000 of debt for non-Pell Grant borrowers who earn less than $125,000 annually ($250,000 for married couples). The debt cancellation only applies to eligible borrowers who accumulated debt through loans issued and held by the Department of Education (DOE).
- All loans held by DOE – including graduate and Grad PLUS loans – are eligible for forgiveness.
- Graduate student borrowers who received Pell Grants as an undergraduate are eligible for up to $20,000 of student loan debt forgiveness, even if the outstanding loans are only graduate school loans.
- Extending the federal pause on student loan repayment, interest, and collections through December 31, 2022. Borrowers should plan to resume payments in January 2023.
- Issuing a new DOE rule that would cap income-driven repayment plans for undergraduate loans at 5% of a borrower’s discretionary income.
- Income-driven repayment plans for graduate loans remain at the 10% cap. Borrowers with both undergraduate and graduate loans will pay a weighted average rate.
DOE will announce details on how borrowers can claim relief through an application in the coming weeks. Millions of borrowers will be able to receive relief automatically based on existing income data. The White House estimates that up to 43 million borrowers are eligible for relief under the plan, including 20 million borrowers who would see the full remaining balance of their student loan debt cancelled.
Impact on General Dentistry: Dental students face disproportionately high costs for graduate level education. In 2021, the average indebted dental graduate owed $301,583 in loans. The AGD will continue to monitor developments related to the student loan relief plan and keep AGD members informed when applications for forgiveness open.