President Biden, Vice President Harris, and the U.S. Department of Education have announced a three-part plan to help working and middle-class federal student loan borrowers.
Part 1. Final extension of the student loan repayment pause
Part 2. Providing targeted debt relief to low- and middle-income families
Part 3. Make the student loan system more manageable for current and future borrowers
Here's all the FACTS!
1. Federal #studentloan payments have been paused since March 2020. The FINAL #pause has been extended through Dec 31 2022, & payments must resume Jan 2023. The pause is automatic, you do not need to extend it yourself.
2. Targeted Debt Relief: Federal #PellGrant recipients get $20K of debt knocked off. Federal Non- Pell Grant recipients get $10K of debt knocked off. You qualify if you earn less than $125,000 yearly for individuals or if you earn less than $250,000 yearly for married/head of households.
2A. If you don't know which #loans you've received. You'll need to find out by checking your credit report/ and calling your Department of Education Loan Servicer. A loan servicer is a company is assigned to handle the billing and other services on your federal student loan.
3. If you owe LESS than these amounts, only the amount you owe gets #cancelled.
Ex, you owe $8K and you're a non-pell grant federal recipient. Only $8K of your federal grants gets cancelled/deleted! Your relief is capped at the amount of your outstanding debt.
3A. Nearly 8 million borrowers may be eligible to receive relief automatically because relevant income data is already available to the U.S. Department of Education. If you are uncertain about the income on file, you can apply for the debt relief.
3B. The application will be available before the pause on federal student loan repayments ends on December 31st. If you would like to be notified by the U.S. Department of Education when the application is open, please sign up here https://ed.gov/subscriptions
4. Additionally, there's the The Public Service Loan Forgiveness (#PSLF) program that forgives the remaining balance on your federal student loans after 120 payments working full-time for federal, state, Tribal, or local government; military; or a qualifying non-profit.
4B. If you want you to qualify to receive credit for past periods of repayment under this program, you must do so before Oct. 31, 2022 Enrollments into PSLF on or after Nov. 1, 2022 will not be eligible for this treatment. Sign up today. Visit https://www.whitehouse.gov/publicserviceloanforgiveness/?utm_source=pslf.gov
5. Making #studentloans more manageable for #borrowers who still have #debt after the #relief is important. Therefore, the plan also includes a new update on income-based repayment plans. The new rule?
5A. Rule #1: Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is down from the 10% available under the most recent income-driven repayment plan.
5B. Rule #2: No borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment.
5C. Rule #3: Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
5D. Rule #4: No Interest! no borrower's #loanbalance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.
6. Follow @brilliantgirlfinance on instagram for a video breakdown!
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