Student Loan Debt Forgiveness Explained: What Black Americans should know when applying

As millions of student debt borrowers prepare for the upcoming application process, theGrio has compiled this brief explainer.

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Following President Joe Biden’s announced student loan debt forgiveness program for tens of millions of Americans, some borrowers may be left with questions about who is eligible and how to apply. 

Just over 43 million Americans are saddled with student loan debt, with Black borrowers taking out the largest amount in federal loans. As several studies and reports show, Black Americans struggle to pay off student loans as family wealth and fair employment are often elusive to Black and brown populations. Black women are especially impacted and owe roughly 22 percent more than their white counterparts.

Given the aforementioned, it’s no surprise that many Black borrowers are eager to receive much-needed debt relief. As you prepare for the upcoming application process, below is a brief explainer.

Student loan borrowers stage a rally in front of The White House to celebrate President Biden cancelling student debt and to begin the fight to cancel any remaining debt on August 25, 2022 in Washington, DC. (Photo by Paul Morigi/Getty Images for We the 45m)

How to apply for student loan forgiveness?

The application will become available in October 2022. You must verify your income with the U.S. Department of Education. However, it is not yet clear what the verification process will look like.

White House press secretary Karine Jean-Pierre told theGrio that President Biden and Education Secretary Miguel Cardona are committed to ensuring the process is as “simple as possible so that it doesn’t become a bureaucratic headache.”

You can be notified of when the application is made available by signing up at the Department of Education subscription page.

Who qualifies for student loan debt forgiveness?

Student loan borrowers who attended either undergraduate or graduate school will receive up to $10,000 in forgiveness if they earn less than $125,000 annually, and couples who earn less than $250,000 annually. Your adjusted gross income will determine your eligibility.

In addition, students who borrowed money through the Pell Grant program tailored for low-income students can receive up to $20,000 in forgiveness. 

Will student loan forgiveness be based on 2021 taxes?

Your eligibility will be determined by your income in the years either 2020 or 2021. Your income in 2022 will not be eligible, according to the New York Times.

How much student loan debt is there?

Collectively, Americans owe approximately $1.7 trillion in student debt. Black Americans owe an average of nearly $53,000 of student debt compared with $28,000 for white graduates.

What to do if one isn’t eligible for student loan debt forgiveness?

Borrowers will see their student loan payments put on pause until the end of 2022 (Dec. 31). Per the U.S. Department of Education, a plan is underway to craft a new repayment plan for those outside the forgiveness qualifications threshold; including reducing repayments for undergraduate borrowers, cracking down on institutions that unfairly raise tuition, and making higher education more affordable.

U.S. President Joe Biden, joined by Education Secretary Miguel Cardona, speaks on student loan debt in the Roosevelt Room of the White House August 24, 2022 in Washington, DC. (Photo by Alex Wong/Getty Images)

Will this plan have a significant impact on Black Americans in student loan debt?

President Joe Biden ran his presidential campaign on the promise to eliminate student loan debt and Americans haven’t paid loans since March 2020, a plan begun under former President Donald Trump. However, despite facing mounting pressure to address the issue, President Biden’s plan falls short of what many proponents of forgiveness were seeking.

Several organizations, including Public Citizen, raised the issue in 2020 by stating that $50,000 should be a minimum amount of debt relief. That amount would have an immediate effect on poverty in the nation, especially for Black Americans, says the nonprofit consumer advocacy organization.

Critics of President Biden’s plan say that the forgiveness totals are far too low to make any real impact on the pockets of borrowers.

White House officials and Democrat elected officials, however, maintain that Biden’s plan – particularly its focus on Pell Grant recipients – will bring much-needed debt relief for Black borrowers and advance racial equity. 

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