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’ transition back to regular payment as pandemic-related support expires.
Some Key Facts from the announcement on August 24, 2022:
Final Extension of the Student Loan Repayment “Pause”
The repayment pause was extended through 12/31/2022, no action is needed, the extension is automatic.
Providing Targeted Debt Relief to Low- and Middle-Income Families
U.S. Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education and up to $10,000 in debt cancellation to non-Pell Grant recipients.
Cancellation of the student loan debt is tax free at a federal level and may be taxable depending on your state of residency. Illinois residents will be tax free.
Frequently Asked Questions on Student Loan $20K/$10K Forgiveness
How do I know if I am eligible for debt cancellation?
- To be eligible, your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households)
- If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt cancellation.
- If you did not receive a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt cancellation.
What does the “up to” in “up to $20,000” or “up to $10,000” mean?
- Your relief is capped at the amount of your outstanding debt.
- For example: If you are eligible for $20,000 in debt relief, but have a balance of $15,000 remaining, you will only receive $15,000 in relief.
What do I need to do to receive loan forgiveness?
- 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 the U.S. Department of Education doesn't have your income data - or if you don't know if the U.S. Department of Education has your income data, the Administration will launch a simple application in the coming weeks.
- The application will be available before the pause on federal student loan repayments ends on December 31st.
To read about the up to date full details of Biden’s plan visit: studentaid.gov/debt-relief-announcement
To be notified when the application process has officially opened, sign up at the US Department of Education website.
Source: https://studentaid.gov/debt-relief-announcement/