The Biden-Harris Student Debt Relief Plan is looking to forgive up to $20,000 in student loans for many borrowers. If you're a parent who signed a loan to help your children through school, there might be some relief for you too.
"For people with student-loan issues, this is really important to them," said Octavio Cardona-Loya, II, a consumer attorney. "It's a cloud hanging over their head."
Many parents are wondering if the plan will apply to the loans they signed for their children. Cardona said that, if your name is on the loan, you may qualify for forgiveness, but that doesn't necessarily mean it's the end of the loan.
"The borrower will qualify," Cardona said. "Anyone who's a co-signer on a loan, whether they're family or a family friend, is still going to be on the hook for the remainder of that loan."
Students often have multiple loans. Cardona ssid it's important to note not all of the loans may be forgiven, especially if some are private loans.
"It looks like the plan is for the forgiveness to be per borrower, not per loan," Cardona said. "Private loans are outside of this whole program."
So how does the program work? If your relevant information is on file with the Department of Education, Cardona said, you should receive debt forgiveness automatically. If you aren't sure or know that the DOE doesn't, you can submit that info when the online application launches. Sign up here to be notified when it is live.
More information on student loan forgiveness:
For many people, this program is welcome news, but the average borrower has more than $30,000 in loans. The forgiveness plan also includes a proposed rule for new income-driven repayment plans, reducing how much people are paying per month.
"When they repay their student loan under these plans, it will be less taxing on them to be able to do that," said Cardona.
For parents of new or future students, remember that California was the first state to pass a Student Borrower Bill of Rights. It took effect in 2021, prohibiting deceptive practices toward student borrowers.
- Loan servicers must provide accurate information about repayments
- They must provide clear answers to your questions
- They must minimize the extra fees they charge
- Payments must be applied in a way that reduces the overall cost of the loan
- They must process and post your payments in a timely fashion
- Records must be kept accurately
It also gives students a place to go and report if they think they are being taken advantage of by lenders.