Pa. ranks among the highest for student loan debt. What to know about the federal forgiveness program

President Joe Biden is providing some relief to federal student loan borrowers, an offer that could help Pennsylvanians, who have some of the highest debt nationwide.

The long-awaited plan, officially announced just a week before the federal pause on payments was set to expire, forgives $20,000 in student debt for Pell Grant recipients and $10,000 for borrowers earning $125,000 or less annually. For married couples, households must make less than $250,000 a year. Biden also proposed reforms to help those in income-driven repayment plans and extended the payment pause — for the final time — on student loans that began in 2020 in response to the COVID-19 pandemic.

The White House estimates that up to 43 million borrowers will see relief, including canceling the remaining balance for roughly 20 million borrowers, as federal student loan debt exceeds $1.6 trillion.

U.S. Senator Bob Casey, D-Pa., celebrated the relief plan, calling it “an important first step forward in helping borrowers saddled with student debt,” he said in a written statement.

“This will give them the freedom to invest in their future, buy a home, or take a risk and start a business,” he said. Casey added that lawmakers need to address “skyrocketing” college costs, so future students can get an education “without signing up for a lifetime of debt.”

With 64 percent of Pennsylvania college graduates having student loan debt in 2019-20, the commonwealth ranks among the highest in the nation for most debt, according to the Institute for College Access and Success, a national organization that advocates for accessible and affordable education.

The average debt load of a Pennsylvania college graduate during the same timeframe was $39,375. In Pennsylvania, 22 percent of college graduates had private student loan debt, with an average total of $42,361.

Thirty-nine percent of Pennsylvania college graduates’ student loan debt was non-federal debt, which is often more expensive and comes with fewer consumer protections than federal debt, according to the Institute for College Access and Success.

Research also shows that 53 percent of Pennsylvania college students attended public colleges. The remaining 47 percent of graduates attended private nonprofit colleges, where costs and debt are typically higher than public schools.

Who’s eligible for loan forgiveness?

According to the U.S. Department of Education, the plan applies to federal borrowers whose annual income falls below $125,000 a year — or households that earn less than $250,00 — and those who received a federal Pell Grant to attend college.

If you did not receive a Pell Grant and meet the income requirements, you are eligible for up to $10,000 in debt cancellation.

What’s next?

In the coming weeks, the Biden administration will launch an application for student borrowers to update their income information.

Student borrowers may also sign up for Department of Education emails to receive a notification once applications are open.