Nothing could have prepared us for navigating life through a pandemic and it’s many stages. On top of pandemic struggles, the cost of living continues to rise and we could all use a break from the constant financial woes. President Biden has stood firm on his promise toward eliminating the student loan debt to the best of his capacity, which comes as a relief to not only individuals but for working and middle-class federal student loan borrowers. The three part plan;
Part 1: Final extension of the student loan repayment pause. What this means is the extended pause is automatically applied. You do not have to take any additional measure to assure your repayment pause.
Part 2: Providing targeted debt relief to low- and middle-income families. The U.S. Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are only eligible if their individual income is less than $125,000 or $250,000 for households. After completing application, borrowers can expect relief with 4-6 weeks and advised to apply by November 15, 2022 to see the relief effective by December 31, 2022. Applications will still be accepted after the pause expires.
Borrowers employed by non-profits, the military, or federal, state, Tribal, or local government may be eligible to have all of their student loans forgiven through the Public Service Loan Forgiveness (PSLF) program, with changes expiring October 31, 2022. Learn more about requirements and eligibility at PSLF.gov.
Part 3: Make the student loan system more manageable for current and future borrowers. What this means is the repayment plan will reduce from 10% to 5% of borrowers monthly income. No borrower earning under 225% of the federal poverty level will have to make a monthly payment. Loans balances after 10 years of payments will be forgiven versus the 20 year requirement. As long as monthly payments are made, no borrower’s balance will grow.
To be notified when the process has officially opened, sign up at the Department of Education subscription page. You’ll have until Dec. 31, 2023 to apply.