NORTH DAKOTA (KXNET) — How will North Dakotans with state-funded student loans be impacted by the recent federal student loan forgiveness program?
President Joe Biden announced that people earning less than $125,000 a year will be eligible for $10,000 in relief and if they used pell grants, up to $20,000.
“95% of the borrowers can benefit from these actions. That’s 43 million people. Of the 43 million, over 60% are Pell Grant recipients. That’s 27 million people who will get $20,000 in debt relief. Nearly 45% can have their student debt fully canceled,” said President Joe Biden.
However, not everyone is in favor of this loan forgiveness plan.
Governor Doug Burgum released a statement on Thursday showing his opposition, calling the plan politically and financially reckless.
He says the plan will encourage colleges to increase their tuition prices and encourage more students to borrow and cause inflation prices to rise.
And for those who have private loans, such as through the Bank of North Dakota, this loan forgiveness plan will not be helping you.
“Loans held through the bank of North Dakota are issued and guaranteed by the state. And so, the loans held by the Bank of North Dakota are not eligible for the loan forgiveness,” said Kelvin Hullet, the chief business development officer at the Bank of North Dakota.
Hullet says in order for state-funded loans to be forgiven, it would have to be up to the state.
“For private loans, such as those held by the Bank of North Dakota to be forgiven, would require legislation to be passed by the North Dakota legislature,” said Hullet.
However, this extra cash in your pocket will come with a catch in some places.
13 states have already come forward to say borrowers may be hit with up to $1,100 in taxes on forgiven student loans.
These states will count this “canceled debt” as income for students.
North Dakota is not one of these states, but Minnesota is.