BREAKING: Biden Announces Student Loan Relief Plan
UPDATED AUGUST 24, 2022
Student Loan Forgiveness
The administration announced $10,000 of student loan forgiveness for individuals who did not receive Pell Grants and $20,000 for users who did receive Pell Grants. This applies to users who have federal loans and make under $125,000 per year.
The student loan forbearance has been extended through December 31st, 2022. Payments and interest will resume in January.
Payment Based on Income
The government has created a new income driven repayment program that caps a monthly payment at 5% of an individual’s discretionary income instead of the previous benchmark of 10%. It also changes the definition of discretionary income to make it more favorable for the borrower.
This plan would only apply to borrowers with undergraduate loans. As part of this change, borrowers with an original balance of $12,000 or less would have their balance forgiven after 10 years. This repayment plan would also cover an individual’s monthly interest, ensuring that the balance does not grow as long as they continue to make their monthly payments.
What We Don’t Know
We do not yet know how the forgiveness amounts will be applied to individuals’ accounts. It is possible that you will receive forgiveness automatically if the Department of Education has your income on file. If not, you may be required to fill out an application for this forgiveness with your servicer. We do not yet know when this application will be available or what it will entail.
What Do You Need To Do Now?
For now, there is nothing you need to do. We recommend you sign up to receive information from the U.S. Department of Education’s Student Loan Updates. We will keep you updated as we learn more!
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