August 25, 2022
Just days before the student loan repayment pause was set to expire, President Biden announced an extension of the payment pause and interest accrual until December 31, 2022.
President Biden also announced that he is canceling $10,000 in student debt for millions
of borrowers. This is a one-time, pandemic related loan cancellation. Additionally,
for those in repayment, a new proposed rule would create a new income-driven repayment
plan which would enable borrowers to pay no more than 5% of their discretionary monthly
income on undergraduate loans (more to come on this.)
Details We Know
- Up to $10,000 of loan cancellation for single borrowers making less than $125,000, or households earning $250,000.
- Students who fall under the income caps and received a Pell Grant while an undergraduate will receive an extra $10,000, totaling $20,000 in forgiveness.
- This applies to federally held student loans (undergraduate and graduate), as well as Parent Plus loans that were disbursed by June 30, 2022.
- Many borrowers may be eligible to receive loan forgiveness automatically because their income data is already available to the Dept. of Ed. (if you filed a 2021-22 FAFSA).
- An application will be available for those who do not have their income on file with the Department of Ed. The application is expected to be available in September. Borrowers who want to be notified when the application is open should sign up for notifications at the ED subscription page.
- Please reference the Department of Education’s website which is regularly being updated with details as they emerge.
Finally, for those in repayment – there are temporary changes to the Public Service Loan Forgiveness (PSLF) program that makes it easier than ever to receive forgiveness if you’ve worked in public service for 10 years, OR if not, to receive credit for past periods of repayment that previously would not qualify for PSLF. Don’t miss out. The deadline to apply for this limited PSLF Waiver Opportunity is October 31, 2022. Visit PSLF.gov to learn more and apply.