Student Loan Forgiveness: What You Need to KnowPosted on: September 6, 2022
The Biden administration announced a three-part plan to help those with federal student loan debt. What happens next?
Extended Pause on Loan Repayments
The current pause on federal student loan repayment has been extended one final time through December 31, 2022. Borrowers should expect to resume making federal student loan payments in January 2023.
Changes to the Student Loan System
The Biden administration is proposing changes to the student loan system so that it is more manageable in the future. These include cutting monthly undergrad loan payments in half, increasing the number of Pell Grants available, and changing the rules for Public Service Loan Forgiveness (PSLF) so that it is more accessible to borrowers.
Federal Loan Forgiveness
The Department of Education will forgive up to $10,000 of federal loan debt and up to $20,000 for those who received Pell Grants. The amount borrowers are forgiven will not be taxed. Here is everything you need to know about this loan forgiveness and if it applies to you:
- You must have federal loans. This program does not to apply to loans held by private lenders.
- You must make less than $125,000 a year if you file your taxes as an individual ($250,000 for married couples or heads of households)
- You must have received your loan payment before June 30, 2022. Loan payments received after June 30, 2022 do not qualify for this forgiveness.
Do I Need to Apply?
For as many as 8 million borrowers this forgiveness will be applied automatically. Borrowers should check their accounts to see if they were automatically forgiven. If they were not, the Department of Education will be releasing an application form before the end of 2022. You can register to be notified when the application is available by filling out this form (https://www.ed.gov/subscriptions). We will post any updates to our blog.