Debt Relief Announcement
Important Information Regarding the Debt Relief Announcement:
Debt Relief Announcement:
The recently announced Biden-Harris Administration's Student Debt Relief Plan includes student loan cancellation up to $20,000 based on income for certain types of federal student loans. We encourage you to visit StudentAid.gov/DebtRelief for the most up-to-date information.
Below is a summary of the Plan. The Plan only applies to student loans held by ED so the Perkins loans will not be included, but they could be consolidated to Direct Loans and be eligible.
Summary of the Biden-Harris Administration’s Student Debt Relief Plan:
The U.S. Department of Education will provide up to $20,000 in federal student loan forgiveness to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 to non-Pell Grant recipients for loans held by the Department of Education.
Borrowers are eligible for this relief if their individual gross income is less than $125,000 per year, or married couples or heads of households less than $250,000 per year, in either 2020 or 2021.
Which Loans Qualify?
Loans held by the Department of Education will be eligible for the forgiveness based on their loan type (and as long as the borrower also falls under the income cap) under the William D. Ford Federal Direct Loan Program. This includes Direct Stafford Loans, and all Direct subsidized and unsubsidized federal student loans, and Parent Plus and Grad Loans are also eligible for the relief.
Commercially held Federal Family Education Loan (FFEL) and loans from the Federal Perkins Loan Program that are not held by the Department of Education are currently excluded. However, an Education Department spokesperson said borrowers with these types of loans can consolidate them into the Direct Loan Program to become eligible. There’s currently no deadline by which the borrower needs to do this, but presumably there will be one.
All private student loans are excluded from the program.
Student loans taken out after June 30, 2022 won’t be included in the relief.
What To Do To Get Cancellation?
The Department of Education said it will launch an application in which borrowers can input their income data and request the loan forgiveness. The application will be available by early October according to an Administration official. Borrowers can sign up on the Department of Education’s website for updates about the process at https://www.ed.gov/subscriptions. Federal Student Aid says the application will be available before the federal student loan repayment pause ends on December 31, 2022. Borrowers are advised to apply before November 15, 2022 in order to receive relief before the repayment pause expires, but the Department of Education will continue to process applications even after the pause expires. Borrowers will have until December 31, 2023 to apply.