President Joe Biden officially announced on Wednesday (August 24) the administration's highly-anticipated plan for student loan forgiveness.
Though the decision is set to impact about 43 million people nationwide, there are some qualifications and exceptions to be aware of, per NBC News.
Recipients of Pell Grants, which are awarded to students with "exceptional financial need" and who fall under an annual income of $125,000 for individuals or under $250,000 for families filing jointly, can have up to $20,000 of their debt canceled under Biden's new plan.
The Biden administration cited Wednesday that over 60 percent of the borrower population are Pell Grant recipients.
“The Department of Education estimates that roughly 27 million borrowers will be eligible to receive up to $20,000 in relief, helping these borrowers meet their economic potential and avoid economic harm from the Covid-19 pandemic,” the White House said.
All other federal borrowers are eligible to receive $10,000 of loan forgiveness if they fall within the same income limits as noted above.
For those claimed as dependents, eligibility will be based on the income of the person claiming the dependent.
Income qualifications can be based on the 2020 or 2021 tax year. This means if you earned $120,000 in 2020, but received raise and made more than the income limit in 2021, you are still eligible for debt cancellation.
While Federal loans for undergrads and graduates as well as Parent Plus loans qualify, loans from private institutions will not be forgiven under this plan.
No high-income individual or household within the top 5 percent of incomes will benefit from the plan, the White House said.
"In the weeks ahead," the Biden administration is expected to release more details on how borrowers who qualify can claim their relief.
Nearly 8 million borrowers “may be eligible to receive relief automatically because relevant income data is already available to the Department,” according to the Department of Education.
The administration also said an application is set to be available no later than December 31, when the pause on federal student loan repayment ends.
To be notified when the application opens, sign up at the subscription page on the Education Department's website.