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Breaking down Biden's new student loan forgiveness plan for Iowans

Local 5 spoke with financial experts and borrowers to help break down what's in the new student loan relief plan announced Wednesday.

DES MOINES, Iowa — President Biden's Monday announcement on student loan forgiveness for $10,000, $20,000, Pell Grants and extending the repayment until the end of the year is prompting immediate reaction for borrowers in Iowa.

Local 5 spoke with financial experts and borrowers to help break down what's in the new student loan relief plan.

Before getting into who benefits from what forgiveness, know that everyone with student loans won't have to repay until next year. 

Biden extended the pause on repayments through the last day of 2022, giving borrowers across the nation five months to start making a repayment plan.

Financial Attorney Leslie Tayne with Tayne Law Group says in the meantime, borrowers should buckle down and figure out a financial plan.

"Time goes by super fast, it's a good time to figure out your budget, what can you can and cannot afford, especially if you're going to still have student loan debt after the forgiveness provision," Tayne said. 

The White House is planning to forgive $10,000 in student loans per person — as long as you make less than $125,000 (or $250,000 as a household.)

More on Biden's plan

If you received a Pell Grant, you can get up to $20,000 in loans forgiven.

Biden's plan is something Bailey Catcher, a Grand View University alum, says she would directly benefit from.

"I borrowed way more than I probably should have, and didn't really have the education around what that would mean afterwards," Catcher said. "At the end of it, I probably have about like, $85,000 [of debt] at this point."

Now you may be asking — what does the "up to" mean?

If you have only $7,000 in student loans, then you'll get it all forgiven. You just won't get any more than that.

Tayne says if you have debt remaining, don't panic since long-term debt is normal.

"Student loan debt in general is considered long-term debt. It's very similar to a mortgage, it's designed to be paid off in 20 to 30 years. So if you took the debt at 20 years old, it's likely that you'll have it through your 20s and your 30s," she said. 

For Catcher, the idea of not stressing over debt is easier said than done. She said she ties her debt to her self-worth and worth to society — and sometimes it feels like it's all in the negative. This potential debt relief is a glimmer of hope for her.

"It would take some stress off of the idea of how big my number is right now. And even if that is just one-eighth of it getting paid off or however much they're willing to help us out with, I think that it would just make it a little bit less debilitating as it is right now," Catcher said. 

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