Student Loan Forgiveness Calculator
On October 17, 2022, the Biden administration officially opened the application for student loan forgiveness, following the recent announcement that the federal government would wipe out billions of debt by. This stimulus program was proposed to help lower the debt burden of the general society and hence boost economic activities. The program will indirectly inject billions of dollars into the economy and is expected to benefit more than 45 million federal student loan borrowers. In fact, after its launch, 12 million borrowers have already applied for student loan forgiveness.
The U.S. government has been introducing several legislation changes lately. We understand that these changes can be confusing at times. Hence, we have prepared this article to help you know how you can benefit from this student debt cancellation program. We also built this student loan forgiveness calculator to help you calculate how much of your student debt will be canceled by this program.
What is the Biden's student debt cancellation plan about?
In the midst of a high inflation environment and the ever-rising living cost, Biden's administration plans to lighten the burden on society by canceling student loans.
This program will reduce your student debt as long as your income falls within the following thresholds:
- Annual income lower than $125,000 for single taxpayers; and
- Annual income lower than $250,000 for married taxpayers.
If you fall within those categories, congratulations! Your student debt will be deducted by up to $10,000 or $20,000, depending on if you receivefor your college. We will explain the calculation in more precise detail in the following section.
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How to use this student loan forgiveness calculator?
This student loan forgiveness calculator is designed to help you calculate the amount of student debt that will be omitted under the new tax plan announced by the President.
Check your filing status
Firstly, you need to check your filing status as it impacts the annual income threshold that determines if you are eligible for this program. There are two different filing statuses:
Determine your annual income
Next, you need to determine your annual income. If you need a helping hand, check our annual income calculator. If you are filing as a single person, you will be eligible for student debt cancellation if your annual income is less than $125,000. If you are filing as a married couple, your annual income will need to be lower than $250,000 to be accepted for this program.
Check if you have received Pell Grants
Now, you will need to tell us if you have received Pell Grants. If you do, you will be eligible for a student debt cancellation of up to $20,000. Else, you will be eligible for cancellation of up to $10,000.
Determine your outstanding student debt
The last step is to type in your student debt that is still outstanding.
Now, please sit back and let our student loan forgiveness calculator do its magic! It will not only help you to calculate the amount of student debt cancellation you are eligible for, but it will also tell you your remaining student outstanding debt after the cancellation has been applied. 🥳
What effects does this plan have?
This plan is introduced to reduce the student loan debt of the U.S. society. According to research by the Department of Education, about 3.3 million people owe more than $100,000 in student loan debt. Furthermore, the U.S. student loan debt has been increasing at an astounding rate since the Great Recession in 2008.
These high debt levels have a severe impact on the economy. The more debt the society has, the less disposable income the people will possess. Thus, people will generally spend less on the economy. To re-ignite the U.S. economy once again, Biden has decided that lowering the debt level of society is the answer.
What is disposable income?
Disposable income is the money you have after deducting taxes and social security charges you need to pay. It is the amount of money that you can spend.
How can I apply for Student Loan Forgiveness?
You may apply online through. It is available on English and Spanish and can be accessed through mobile and desktop devices. It asks for your date of birth, Social Security Number, and contact information. You don't need to upload any documents.
What are Pell Grants?
The U.S. government provides Pell Grants as a subsidy for students who need the money to attend college. This program is limited to:
- Students with financial needs;
- Students who have not earned their first bachelor's degree; and
- Students who are enrolled in specific post-baccalaureate programs.
How much of student debt cancellation am I eligible for if I did not receive Pell Grant?
You are eligible for $10,000 student debt cancellation if you did not receive Pell Grants, provided that your annual income is below the threshold ($125,000 for single people, $250,000 for couples).