Biden Announces $10,000 Federal Student Loan Forgiveness; Repayment Pause Extended to Dec. 31; $20,000 Forgiveness for Past Pell Grant Recipients
Today President Biden announced forgiveness of $10,000 in federal student loan debt for any borrower earning $125,000 or less; he also extended the repayment pause period to the end of the year.
Borrowers who received Pell Grants during their schooling can receive forgiveness of up to $20,000 in federal student loan debt.
Other key takeaways:
Federal loans awarded after July 1, 2022, including graduate and Parent PLUS loans, are eligible for forgiveness. This includes students included as dependents if their parents’ household income is under $250,000.
A new income-driven repayment (IDR) provision will cap repayment for all undergrad loans at 5% of a person’s monthly income (it’s currently 10%). The IDR plan also covers a borrower’s unpaid monthly interest and allows debt to be forgiven after 10 years instead of 20 for any borrower with balances under $12,000.
Borrows who have both undergrad and grad debt will pay a “weighted-average” rate. Your provider will give more details as this formula is finalized.
The process: Cancellation won’t be automatic for some borrowers, in part because the Education Department only has income information for around 8 million borrowers who are enrolled in IDR plans or other programs with required income info. Some borrowers will need to submit an application that the Education Department is still developing and will release in the coming weeks.
Borrowers will receive communications from their loan providers with final details when the forgiveness process is finalized, but the goal is to make things as easy and automatic as possible for the borrower, loan providers, and Education Department.
Biden Urges Public Servants Who Borrowed Federal Student Loans for School to Consolidate Their Loans and Submit PSLF Form by October 31
SPECIAL DEADLINE ALERT: October 31 is the critical deadline for any federal loan borrower in public service (social workers, teachers, government agency professionals, nonprofit workers, etc.) to consolidate their loans to qualify for the Public Service Loan Forgiveness (PSLF) Program and submit a new PSLF form.
Learn more at www.studentaid.gov/pslf.
"The revamped PSFL program is a HUGE opportunity for social workers carrying federal student loan debt to receive forgiveness immediately or faster than scheduled, or to lower monthly repayments," says NASW Virginia/Metro DC Executive Director Debra Riggs, CAE. "If you need help, please consider contacting NASW's student loan partner, SAVI, which charges members only around $35 to review, manage. and submit the paperwork for you. I'm already hearing stories of PSFL forgiveness of social workers' student loan debt through this dramatically revamped program."