Earlier this year, President Biden released a three-part plan to provide “more breathing room to America’s working families as they continue to recover from the strains associated with the COVID-19 pandemic.” As the cost of a college education has nearly tripled in the last 50 years, the Student Loan Relief program seeks to assist students and their families by relieving the burden of loan payments, which has been exacerbated by the COVID-19 pandemic and soaring national inflation. This is exciting news for current or previous college students with loan debt, but it’s important to consider all options and make the best choice for your finances and future.
For those interested in learning more about the program, here are five facts to note while you consider applying.
Fact #1: All borrowers are eligible for forgiveness if their income is less than $125,000 for an individual and $250,000 for married couples.
The Student Loan Relief program is intended primarily to help middle- and lower-class loan borrowers making less than $125,000 for an individual and $250,000 for married couples. The Department of Education expects to assist 43 million Americans, with about 20 million receiving total cancellation of their debt.
What does this mean for you? In determining whether you’re eligible for student forgiveness, you should speak with your financial advisor, parents, and/or spouse about your household income and whether your family would fall within the threshold for loan forgiveness.
Fact #2: Non-Pell Grant borrowers are eligible for debt cancellation up to $10,000.
Regardless of how much you borrowed, you can receive loan forgiveness for up to $10,000 on your remaining balance if you are a non-Pell Grant recipient. According to the Student Loan Relief program, if you are forgiven a portion of your loans, you could expect your loan payment to be lowered by more than $1,000, if not canceled entirely. As of now, there is no set standard on how much you could be forgiven for within the $10,000 threshold.
As you begin applying for the program, it’s a good idea to look at your total amount owed through your designated loan provider to understand how much you owe before applying. Remember to check to see if you meet the criteria necessary to qualify.
Fact #3: Pell Grant recipients are eligible for debt cancellation of up to $20,000.
If you received a Pell Grant as part of your financial aid, you could receive loan forgiveness for up to $20,000 on your remaining balance. According to the Student Loan Relief program, if you are forgiven a portion of your loans, you could also expect your loan payment to be lowered by more than $1,000, if not canceled entirely. As of now, there is no set standard on how much you could be forgiven for within the $20,000 threshold.
Not sure if you were given a Pell Grant during your financial aid settlements for college? The best way to find out is to view your profile on your loan provider’s website and see any language regarding your acceptance of a Pell Grant, you may be eligible to receive loan forgiveness for up to $20,000.
Fact #4: All loan repayments will be paused through December 31, 2022.
While the application process is scheduled to remain open until October 31, the Department of Education has extended the forbearance period for one final time until December 31, 2022. Because of this short time frame, the administration recommends that eligible students apply for student loan forgiveness quickly and non-eligible borrowers begin to think about their loan payments for the 2023 year and beyond.
Fact #5: Maximum monthly repayment cap will be available for specific borrowers.
In addition to outright loan forgiveness of $10,000 for non-Pell Grant recipients and $20,000 for Pell Grant recipients, the Biden administration announced plans to establish maximum monthly repayment caps for lower-income borrowers. Geared at assisting undergraduate loan borrowers, the Biden administration wants to cut monthly loan repayment bills in half, resulting in payments that adhere to 5% of a person’s discretionary income. For example, based on their calculations, a borrower making approximately $38,000 a year would only pay $31 a month, compared to the $147 they have previously for annual savings of nearly $1,400.
Similarly, borrowers who make less than minimum wage ($15 per hour) could also be granted partial or complete loan forgiveness due to their standard of living being below the federal poverty line.
For those who have already started making payments, the program also seeks to forgive loan balances of those who have made payments for more than 10n years (with loan balances of $12,000 or less) instead of the traditional 20 years.
If you’re interested in learning more about the Student Loan Forgiveness program, including information on eligibility and frequently asked questions, visit their website.
Whether you’re interested in applying for the Student Loan Forgiveness program, paying off student loans can undeniably be stressful for any student. As the world of loan forgiveness continues to change, colleges like ACU have recently stepped up to offer tuition freezes to help combat and alleviate further confusion and remain steadfast during market fluctuations. Through ACU Online’s Locked-In Tuition, you will gain access to more than just one way to afford your degree, including an expansive list of in-house scholarships and financial aid. Focused on working adults like you, ACU’s online learning environment is uniquely designed to guide you throughout your degree program, from completing coursework to balancing life’s significant commitments.
Don’t wait! Visit our website or call 855-219-7300 to learn how you can step into the exciting, innovative future of higher education at ACU Online.