The White House recently announced a plan to forgive up to $20,000 for student loan borrowers as part of a larger debt forgiveness program. There are still quite a few complexities with the program, but here are the core components you should know.
- Pell vs. Non-Pell: Loan forgiveness of up to $10,000 is available to non-Pell Grant recipients and up to $20,000 for Pell Grant recipients. Only federal student loans are eligible to be forgiven. Loans held through a private lender are ineligible for this program.
- No Surplus: The amount of student loan forgiveness available depends on how much you still owe. For example, if you only owe $8,000 in federal loans but qualify for $20,000 of relief, you will not be receiving the surplus of $12,000. In other words, you will not receive more than you owe on your federal loans.
- Income Cap: Borrowers are eligible for relief if their 2020 or 2021 salaries were under $125,000 for individuals or under $250,000 for married couples or heads of households.
- Loan Dates: Federal loans taken out after June 30, 2022, do not qualify for loan forgiveness.
- Application Process: Depending on your lender, you may already be approved and have your account credited by the end of the year. The application process begins in a few weeks, but you have until December 31, 2023, to apply.
One thing to note is that as more details are released, scams may also pop up. Remember to practice caution and good business sense if someone contacts you about your student loans. For more information, please visit: https://studentaid.gov/debt-relief-announcement/.
Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
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