As higher education costs continue rising, many students struggle to repay their loans. The Biden-Harris administration proposes a new income-based repayment and Student Loan Forgiveness plan to make the lending process more manageable for future borrowers.
The Biden-Harris Administration recently has committed to providing relief for student debtors. Under the new Student Loan Forgiveness plan, borrowers can receive up to $20,000 in debt forgiveness, depending on some factors regarding their loans, income, and other financial aid they’ve received.
The government’s moves to “cancel” the debt and extend the student loans pause are just two parts of a larger Student Loan Forgiveness plan that could turn out to be the most costly executive plan in the history of higher education. The Biden-Harris administration and the U.S. Department of Education (DOE) have developed a three-part plan to help federal student loan borrowers return to regular repayment schedules and prevent unnecessary delinquencies or defaults. The updates also complement previously announced changes, including ending the amnesty for government service loans and the Fresh Start program for insolvent borrowers.
Here’s a look at the various initiatives involved with the plan, who qualifies, and how to go about claiming the relief. With this new plan in place, students can focus on their education without the burden of oppressive debt weighing them down.
Student Loan Forgiveness: When Do Student Loans Resume?
As of December 31st, 2022, the automatic pause on student loans repayments has been extended once again. This means you will not have to make any loan payments until later. Don’t hesitate to get in touch with your lender for more information if you have any questions about your loan or repayment status.
The Department of Education proposes a new income-based repayment plan to protect more low-income borrowers from repayment and cap monthly college loan repayments to 5% of borrowers’ discretionary income, which is half the rate borrowers currently have to pay in most cases.
In addition, there are plans to write off up to $10,000 of federal student loans debt for borrowers making less than $125,000 with relief of up to $20,000 for those who received a Pell Scholarship and qualify for borrowers.
How to Apply for Student Loan Forgiveness in 2022?
There are a few things to consider if you want to have your student loans forgiven. The first is whether or not you qualify for relief. The relief is most heavily targeted to low and middle-income families, so if you come from a family that falls into either of those categories, you may be eligible for more forgiveness than others.
Individuals with income under $125,000 or households with under $250,000 in total annual income are eligible as follows:
Pell Grant recipients with loans held by the U.S. Department of Education will have up to $20,000 in student debt canceled. Non-Pell Grant recipients with loans held by the U.S.
The Department of Education (DOE) is still working out the details of how to forgive debt for students who took out loans from private lenders. We will continue to provide updates here as they are announced. In the meantime, it is encouraged to apply for relief as soon as possible to receive it before the repayment pause expiration (end of the year).
What do you need to know about Public Service Loan Forgiveness Program (PSLF)?
Are you struggling to pay off your student loans? Then, you may be eligible for the Public Service Loan Forgiveness (PSLF) program.
The Public Service Loan Forgiveness (PSLF) program may forgive the remaining loan balance on your Direct Loans after you make 120 monthly qualifying payments while working full-time for a qualifying employer.
To qualify, you must be employed by a government organization, non-profit organization, or another qualifying employer when you apply for student loan forgiveness and during loan repayment.
Overall, according to an analysis provided by the Department of Education, student loan forgiveness will eliminate student debt for about 20 million people and cut monthly payments by an average of $250 for borrowers with residual balances who have payment plans.