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What's next for borrowers after President Biden's plan to forgive student loans

Posted at 7:02 PM, Aug 25, 2022
and last updated 2022-08-26 13:58:47-04

PHOENIX — President Joe Biden's plan to forgive some student loans has some borrowers asking questions.

"We've received a lot of calls from students and families coming in," said Melissa Pizzo, ASU's associate vice president of enrollment services, financial aid and scholarships.

"The announcement just came out from the Dept. of Education and just like other folks, we're waiting on updates and information as well," she said.

Under Biden's plan, people making less than $125,000 a year may have $10,000 in student loans forgiven. However, they have to be a federal loan.

Additionally, borrowers that received a Pell grant may have $20,000 in federal loans forgiven.

"Not having to worry about that extra paycheck that goes to your student loans can now be spent on our local economy which helps greatly," said Jessica Mendoza, a data manager for Arizona Students' Association.

The Valley nonprofit advocates for affordable higher education.

Mendoza tells ABC15 that she'll have about half her loans forgiven.

She said the money she'll save can go to feeding her child or paying a mortgage.

Meanwhile, economist Jim Rounds said there will probably be some kind of application process.

"In terms of applying, I'm sure there's going to be basic paperwork like you'd always expect but I'm also expecting those monotonous government documents coming in the near future rather than being made available right away," Rounds said.

He emphasized this is not free money and will have to be paid back somehow in the future.

Even if people don't qualify for the forgiveness, Rounds said borrowers should do some research.

"There are some other loan programs out there," he added.

"Borrow what you need to but make sure you're studying something that can help you with your career and if you're going to take out a loan make sure you can afford to pay it in case there's not a program like this offered to you later," Rounds said.

In Arizona, nearly 800,000 borrowers may be eligible for student loan forgiveness.

For more information about the program, visit the Department of Education's website.