Student Loan Relief Explained

Terrance Hutchins |

 

The long awaited decision on the initial student loan forgiveness program was announced yesterday. More details will come out but here are the highlights.

 

  • Outstanding federal student loan payments will resume January 2023. This will happen automatically. So look to prep your budget in the new year accordingly.

 

  • If you received a Pell grant during college you are eligible for up to $20K worth of student loan forgiveness on your Department of Education loans. If you did not receive a Pell grant during college you are eligible for up to $10K worth of student loan forgiveness.  You can check if you received a pell grant via the Federal Student Aid website listed here Log In | Federal Student Aid. You can find this info on your aid summary page once you have logged in.

 

  • This only applies to individuals whose income is less than $125K or $250K for households. There will be an application to verify your income.

 

 

  • There is a new rule being proposed for the Income Driven repayment plans. 
    • The rule would require borrowers to pay no more than 5%(down from 10% currently) of their discretionary income monthly on undergrad loans
    • If you make under 225% of the poverty line(roughly $15 an hour Full-time) then you would be protected from having to make any payments
    • If you have a loan balance under $12K you can have your loans forgiven after 10 years of payments(instead of the 20 years currently).
    • Your loan balance wouldn’t grow(due to interest accruing) as long as you make the required monthly income based payment. 


If you are currently or formerly employed by a government or not-for-profit organization you can read more about the Public Service Loan Forgiveness(PSFL) program in this article. Click on this Link Please