Student Loan Forgiveness: What You Need to Know
The Announcement:
On the heels of President Biden’s announcement last week, there is a lot of confusion and many questions around Student Loan Forgiveness. There are parameters for who qualifies, and which loans can be forgiven, so it is very important that you determine whether or not you qualify, and then make an action-plan from there.
While things may change in the coming weeks, here is what we know so far…
** Note: If you have student loans, please contact your Triune advisor to discuss your unique circumstances.
Not a Triune client, but have questions? Schedule an intro call today.
What You Need to Know:
This only applies to Federal student debt.
You are eligible if your Adjusted Gross Income (AGI) is less than $125,000 ($250,000 if married filing jointly). Your AGI from 2020 or 2021 may render you eligible, but 2022 income will not (per the New York Times).
The Department of Education will cancel up to $10,000 per borrower, and up to $20,000 for Pell Grant recipients.
The pause on student loan repayments has been extended to December 31, 2022. Borrowers should expect payments to resume in January 2023.
The Department of Education has also proposed a new income-driven repayment plan that caps monthly payments at 5% of discretionary income (down from 10% for some of the current income-driven repayment programs). This only applies to undergraduate loans.
Special Note if you have ALREADY made payments (or even paid off) your Federal student loans:
According to the Federal Office of Student Aid, you can request a refund for any payments made since March 13, 2020.
You will likely need proof of payment.
Not all loans are eligible (like the FFEL, Federal Perkins Loans, private student loans).
So, if you paid up to $10,000 towards your qualifying student loans since March 13, 2020, you may request a refund of those payments, and then request student loan forgiveness to have the remaining amount forgiven.
Be sure that your income qualifies before taking this step.
What To Do Next
Watch for the online application expected to be launched in the coming weeks for borrowers to provide their income information. This application is expected to be made available before the repayment pause ends on December 31.
You can sign up for updates by checking the “Federal Student Loan Borrower Updates” box and entering your email at the Department of Education's subscriptions page.
