The student loan forgiveness plan states Pell Grant recipients can get up to $20,000 in debt relief, while non-Pell Grant recipients who also took out loans from The Department of Education, including Parent Plus loans, can get up to $10,000. The plan does not cover private loans.
To qualify for student loan debt relief, you need to meet the Biden-Harris Administration’s income restrictions. If you’re single and earn more than $125,000 per year or married and earn more than $250,000 in total income per year, you must repay your student loans in full. Current students are eligible only if their parent(s)’ income falls below the cap.
The federal student loan pause has also been extended through December 31, 2022. No application is required.
5 Questions About Biden's Student Loan Forgiveness Plan, Answered
1. Does the debt relief apply to new undergraduate and graduate student loans?
No. The $10,000 to $20,000 package only applies to loans taken out before July 1, 2022.
2. If I already made student loan payments, can I receive a refund?
Yes. If you’ve been paying down the principal balance on your student loans throughout the pandemic, you’re in luck: according to the Federal Student Aid website, all payments made from March 13, 2020 to present are refundable.
To initiate your refund, contact your student loan servicer as soon as possible.
3. How much of my student loan debt will be forgiven?
Your debt relief amount is determined by how much you owe. For example, if you owe $25,000 on your film school degree and received Pell Grants, expect $20,000. If you owe $8,000 and did not receive Pell Grants, expect $8,000.
If you were up to date on your student loan payments prior to March 13, 2020, interest accrued prior to the pause will not capitalize. That means zero outstanding interest will be added to your student loan debt once the pause is lifted on January 1, 2023.
4. Do I need to fill out a form or contact my student loan servicer to qualify for debt relief?
To automatically receive debt relief, you will have needed to share your income with the federal government.
If The Department of Education has not received your income data, prepare to file an application sometime in October 2022. Get notified when the application opens. After submitting your application, you may receive student loan debt relief in as little as 4-6 weeks.
5. How will Biden's student loan forgiveness plan affect the future of taking out student loans?
If you’re thinking about earning your film degree in the next few years, it may be more feasible than ever to make more affordable monthly student loan payments. The Biden-Harris Administration is dividing a new rule to reduce student loan payments for low- to middle-income borrowers that would:
- Cap undergraduate student loan payments at no more than 5% of borrowers’ discretionary monthly income (down from 10%).
- Borrowers with graduate and undergraduate student loans will pay a weighted average rate.
- Prevent borrowers earning under 225% of the federal poverty level from being required to make monthly payments.
- Forgive student loan balances after 10 years of repayment (down from 20 years).
- Cover borrowers’ unpaid monthly interest — as long as regular monthly payments are made, even if the monthly payment due is zero dollars thanks to having a lower discretionary income.
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Editor's note: This article was published prior to the Biden Administration's announcement that a lawsuit has temporarily stalled its student loan forgiveness plan. As of Nov. 12, 2022, the U.S. Department of Education student loan forgiveness beta website is now closed. Prior applications were not nullified. Sign up to get alerted when the application reopens.
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