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On Wednesday, August 24th, the Biden administration officially announced the cancelation of $10,000 in federal student loan debt for borrowers who make less than $125,000 a year (or $250,000 for married couples), as well as forgiving $20,000 for those who attended college with a Pell Grant. This change is estimated to aid 43 million Americans and fully relieve the debt of 20 million borrowers.
The White House also announced a final, further suspension of student loan debt interest payments through the end of the year. The Trump administration halted loan interest payments in 2020 in response to the COVID-19 outbreak, and President Biden has subsequently continued the suspension since. The White House reiterates that this will be the final suspension.
Both policy changes apply only to federal student loans and not private student loans.
Additionally, the Administration announced changes to payments based on income. If a borrower has an undergraduate loan, the repayment cap will be set at 5% of their monthly income.
NAR strongly supports policy proposals to allow student loan borrowers to refinance into lower interest rates and to streamline loan programs. Additionally, NAR supports policy proposals that promote student loan simplification, clarity and education. Further, NAR supports policies that provide tax relief to student debt holders, as well as to employers who choose to assist with their employees' student loan debt burdens. In addition, NAR supports policies that provide tax relief to those borrowers with forgiven student debt. NAR also shall ensure that mortgage underwriting guidelines related to student loan debt are standardized and do not impair homeownership.
NAR's research shows that student loan debt is one of the biggest barriers to overcome when purchasing a home, and that 51% of all borrowers have put off purchasing a home due to student loan debt.