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Biden student loan forgiveness impacts borrowers making less than $125,000

The Department of Education is expected to release more guidance in the coming weeks.
Posted at 5:25 PM, Aug 24, 2022
and last updated 2022-08-24 21:50:22-04

MILWAUKEE — President Joe Biden's student loan debt forgiveness plan impacts former and current college students, as well as parents.

Wisconsin alone has 727,400 student loan borrowers living in the state with an average of $31,894 in debt.

The president's plan cancels up to $10,000 in federal student loans for individuals earning less than $125,000 or married couples who file jointly earning less than $250,000. The amount of relief can reach up to $20,000 for those who also had a Pell Grant.

Mark Quistorf, director of financial aid at Cardinal Stritch University, said they are waiting on formal guidance from the U.S. Department of Education on when borrowers could see relief hit their balances.

"It may be automatic where the Department of Ed may work with the IRS on income data and do some automatic forgiveness. It also may be something where students have to apply for forgiveness," Quistorf said.

Quistorf strongly recommended borrowers get in touch with their loan servicer to help navigate the process.

For Monica Blake, the president's action on student loan forgiveness could get her closer to her dreams.

"That would be beautiful," Blake said.

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Blake is a grandmother and a chef at Rise and Grind Cafe in Milwaukee. People call her Chef Mo. Blake went to a couple of culinary schools and started paying her student loans back in 2015. She has about $2,000 left to go.

"I was trying to pay that off before I re-enrolled into school so that would help me out a lot," Blake said.

Blake said she left school without completing her program to become an executive chef after her mom's death. For her, student loan relief could mean she could finish her program with a lighter load.

"I can get my business. I love working for Rise and Grind but I also want my own business. I do my own seasonings and everything so that would help me out a lot," Blake said.

The president's action includes more than forgiveness. It puts one more pause on federal student loan payments through December of this year.

The debt relief would not be treated as taxable income.

The Department of Education is expected to release more guidance in the coming weeks.

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