Recently, President Joe Biden announced a sweeping student loan forgiveness plan. We want to clarify what, exactly, this plan is, and the key information you need to know.
Student Loan Forgiveness
President Biden announced on Wednesday, August 24, 2022, that a student loan forgiveness plan would go into action this year for federal loan borrowers. Although specifics are still being announced, here’s what you need to know:
What is it?
President Biden has announced a plan for student loan relief in 2022. The plan will forgive $10,000 in student loans for individuals making less than $125,000 per year or married families/heads of household making less than $250,000 per year.
For individuals who received a Pell Grant, the total amount of loans forgiven increases to $20,000.
How do I enroll in the forgiveness program?
President Biden has announced that many federal student loan providers already have borrowers’ tax information, and loans may be forgiven automatically. However, if this isn’t the case, or you want to ensure your loans are forgiven if you qualify, the Department of Education is planning to roll out a formal application program in the coming weeks.
What else does it include?
For those who have enrolled in an income-driven repayment plan (IDR), payments are now capped at 5% of your monthly income as opposed to the previous 10%.
Will loan payments continue to be paused?
Yes. President Biden has issued a final pause on student loan payments through December 31, 2022.
What about private loans?
This loan forgiveness plan only covers federal student loans.
Now what?
If you have questions, we encourage you to reach out. We are happy to help in any way we can!
