There have been many changes to Student Loans over the last few years. All the changes and procedures, new and old, even have the experts confused. It is important to know the details about the PSLF (Public Service Loan Forgiveness) and the Forgiveness that President Biden approved so you don’t miss out on anything that will help you pay off your student loans.
Student Loan and PSLF Waiver dates you need to know
~October 15 – Application opens for Biden’s $10-20k cancellation
October 31 – PSLF Waiver Ends
December 31 – Payment freeze ends; payments resume in January
January 1 – Income-Driven Repayment Account Adjustment is supposed to be done
December 2023 – The application period for Biden’s $10-20k cancellation ends
Do you qualify for the Debt Cancellation?
You are eligible if the following applies:
A Your annual income must have fallen below $125,000 (for individuals) or $250,000 (for couples or heads of household).
B 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 are unsure about this, you can check your account at StudentAid.gov)
C Parent Plus loans are eligible, and graduate school loans as well. Parents and students are considered separate borrowers and eligible for cancellation.
What do I need to do to get the loan cancellation?
It is recommended that all eligible loan borrowers apply for the cancellation when the application opens. It should open in October. You can sign up here to be notified when it is open.
If the Department of Education already has your income information, the cancellation will happen automatically, but they still recommend everyone apply. I think this will help your process go smoother.
After submitting your application, you can expect relief within 4-6 weeks.
Borrowers are advised to apply before November 15, so the forgiveness will be applied before payments resuming in January.
What is the PSLF Waiver?
The Waiver is to help people who have worked in qualified Public Service but didn’t get the years counted to have them counted and applied towards the 120 payments.
Even if you didn’t make payments, they will allow up to three years of Forbearance or Deferment to count towards payment.
If you have worked in Public Service, a full-time job for federal, state, Tribal, or local government; military; or a qualifying non-profit, and didn’t have the years counted, I recommend applying. I would suggest you apply even if you didn’t have 10 years because those years could count if you move into a job that qualifies to finish the years.
For the waiver to apply, your loans must be held by the Department of Education. If you have been told in the past that your federal loans “are not the right kind” for forgiveness, you can also do a one-time consolidation from FFEL Loans to Department of Education loans.
This move, plus the waiver, could get many of you who have worked in Public Service forgiveness of your loans.
What other changes should I expect with income-driven repayment?
The Biden-Harris administration proposes some changes that would significantly reduce the amount of loans paid by middle and lower-income borrowers.
The new rule would include the following:
A Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is reduced from the 10% required by previous rules.
B Raise the amount of income that is considered non-discretionary income and protected from payment. This would guarantee that no borrower earning under 225% of the federal poverty level –about the annual equivalent of a $15 minimum wage for a single borrower –will have to make minimum payments.
C Forgive loan balances after 10 years of payments instead of 20 years for borrowers with loan balances less than $12,000.
D Covers the borrower’s unpaid monthly interest. Unlike existing repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.
This last one is HUGE, especially if you have heard some of the stories of how student loans grow. Like the one woman who got a $10,000 parent plus loan in the 80s, and because she hasn’t been able to pay on it, it has grown to over $1Million! There is almost no way out until forgiveness happens for someone like this.
This information was taken straight from the government’s student loan information website. You can check back here for updates and more information.