Home » Student Loan Debt Relief Announced:  Here’s What it Means For You

Student Loan Debt Relief Announced:  Here’s What it Means For You

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Today President Biden, Vice President Harris, and the U.S. Department of Education announced a 3 half scholar mortgage debt aid plan to assist federal scholar mortgage debtors following the pandemic.  The three half plan contains an extension of the pause on scholar mortgage funds, debt cancellation, and proposal to create an income-driven reimbursement plan to assist decrease future month-to-month funds.

You might be asking “What does the brand new scholar mortgage aid imply to me?” and “How do I get the coed mortgage aid?”.  Don’t fear, we now have you coated.  Here’s a breakdown of what’s within the plan and how one can get scholar mortgage debt aid.

What’s within the Biden-Harris Pupil Debt Aid Plan?

Pupil Mortgage Cost Pause

  • The coed mortgage fee pause that was set to run out 8/31/2022 has been prolonged to Dec 31, 2022 for federal scholar loans.

Notice the pause contains suspension of mortgage funds, 0% curiosity, and stopped collections on defaulted loans.  You might also see a decrease scholar mortgage curiosity deduction if you file your taxes you probably have been benefiting from the coed mortgage fee pause this yr.

Debt Cancellation

  • As much as $10,000 in debt cancellation for federal scholar loans and 
  • As much as $20,000 in debt cancellation to Pell Grant recipients with loans held by the Division of Training if particular person earnings is lower than $125,000 and fewer than $250,000 for households

Debtors employed by non-profits, the army, or federal, state, tribal or native authorities could also be eligible to have all of their scholar mortgage debt forgiven by way of the Public Service Mortgage Forgiveness Program.

Proposal to Create New Revenue-Pushed Reimbursement Plan

The Biden-Harris Administration can be proposing a rule to create a brand new income-driven reimbursement plan that may considerably cut back future month-to-month funds for lower-and middle-income debtors.

The brand new proposed plan:

  • Would require the borrower to pay not more than 5% of discretionary earnings on undergraduate loans as an alternative of 10% below most present income-driven reimbursement plans
  • Would increase the earnings requirement for reimbursement guaranteeing that debtors making below 225% of the Federal Poverty Stage (concerning the annual equal of $15 minimal wage) won’t must make a month-to-month fee.
  • Would forgive balances of $12,000 or much less after 10 years of funds as an alternative of 20 years
  • Would cowl debtors unpaid month-to-month curiosity in order that not like current income-driven reimbursement plans, debtors mortgage balances won’t develop so long as they’re making month-to-month funds.

Do I Must Do Something to Obtain the Pause on Pupil Mortgage Funds?

No you don’t have to do something.  The extension shall be automated.

How Do I Know If I’m Eligible for Pupil Mortgage Debt Cancellation and How Do I Get It?

In case you meet the earnings thresholds you might obtain aid mechanically due to related earnings information already obtainable to the U.S. Division of Training.  In case you assume the U.S. Division of Training doesn’t have your earnings information or if you happen to don’t know if the U.S. Division of Training has your earnings information, the Administration will launch an utility within the coming weeks, which shall be obtainable earlier than the pause on federal scholar mortgage repayments ends on December thirty first.

If you need to be notified by the U.S. Division of Training when the appliance is open, please enroll on the Department of Education subscription page.

Verify again with the weblog for extra updated info and particulars as extra steering is issued.

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Lisa Greene-Lewis
Lisa Greene-Lewis

Lisa has over 20 years of expertise in tax preparation. Her success is attributed to having the ability to interpret tax legal guidelines and assist purchasers higher perceive them. She has held positions as a public auditor, controller, and operations supervisor. Lisa has appeared on the Steve Harvey Present, the Ellen Present, and main information broadcast to interrupt down tax legal guidelines and assist taxpayers perceive what tax legal guidelines imply to them. For Lisa, getting well timed and correct info out to taxpayers to assist them maintain extra of their cash is paramount. Extra from Lisa Greene-Lewis

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