BALTIMORE — The White House is making changes to income driven repayment plans, a way for borrowers to clear longstanding student loan debt.
The Biden administration announced today a recalculation of income driven repayments
"Under these plans, borrowers become eligible for forgiveness after they have made 20 or 25 years of qualifying payments, so once a person hits that 25 years the remainder of their debt will be canceled," said Rachel Rotunda, Director of Government Relations at the National Association of Student Financial Aid Administration.
People who qualify for this forgiveness don't have to do anything, they'll get alerted to it by the student aid office.
According to the White House, the cost to taxpayers is expected to be around$39 billion.
"This announcement really is going to be a game changer for hundreds of thousands, nearly a million borrowers who have been subject to the systemic failures of our student loan system for the longest time," said Aissa Canchola Bañez, senior policy adviser, student borrower protection center.
According to a study from the National Bureau of Economic Research, borrowers in student debt have added more personal debt during the pause.
This means some people are in a worse financial position than before the pandemic began and now loan bills are due in a few months.
"Fear, anxiety and confusion, and I think it's very fair. For three years now borrowers haven't had to make a payment," said Canchola Bañez.
President Biden's most popular student forgiveness program, which would've given up to $20,000 to every person with federal loans isn't the end of his administration's attempts to cancel student debt.
Rotunda believes the administration is still looking for a broader impact of debt forgiveness.
