WASHINGTON — Millions of Americans are waking up with less debt today after President Joe Biden authorized some limited student loan forgiveness.
So who qualifies? When will the debt relief post to your account, and how much will all of this cost taxpayers?
$10,000 worth has been authorized to be forgiven by President Biden.
However, only Americans with federal student loan debt who make under a certain income threshold qualify. Private loans do not qualify for forgiveness.
If you file your taxes as an individual and make under $125,000 annually, you qualify.
Couples who file their taxes jointly qualify if they make under $250,000. Each partner would be eligible for $10,000 worth of forgiveness.
The Department of Education is working on setting up an online application so you can claim your relief over the coming weeks.
If you were a Pell grant recipient in college — typically given to students from families earning less than $60,000 a year — you are eligible for $10,000 more in additional forgiveness.
Current college students with federal loans are eligible too.
The President is facing backlash for the move, however. There is no help for Americans who have already paid off their debt on their own.
Conservatives say this forgiveness will make inflation worse. Many progressives believe the president could have forgiven even more debt.
"It's complicated, and there is a lot of dollars in play," Will McBride, an analyst with the Tax Foundation, said.
His worry? This will cost taxpayers and the deficit.
McBride says the president recently signed new legislation cutting the deficit by $300 billion. Forgiveness is going to cost taxpayers over $200 billion.
"We just had something passed called the Inflation Reduction Act this past week, and the whole argument about how it will reduce inflation is that it will reduce deficits," McBride said.
The pause on student loan payments has cost taxpayers around $120 billion. The pause for the rest of the year will result in that figure being even higher.
This is not the end of the student loan debate. Expect President Biden's order to face legal challenges -- challenges that may take years.
WHEN WILL PAYMENTS BEGIN?
If your debt wasn't wiped out with forgiveness, you will soon have a student loan payment.
Americans haven't paid federal student loan payments since March 2020, but the payments will begin again in January.
Monthly payments will be lower this time around, though.
For Americans on income-based repayment plans, payments will only be 5% of the borrower's monthly salary. Right now, it's 10%.