Student Debt Relief Resources
President Biden has taken historic action to relieve the burden of mounting student debt from Americans by forgiving up to $20,0000 per borrower. Forgiving this debt will free more people up to buy homes, start families, pursue their dreams and to save for the future. Please sign up for my newsletter here, if you would like to get email updates on how I am working in Washington to help my constituents.
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Borrower Eligibility:
Borrowers with incomes under $125,000 (single) or $250,000 (married filing jointly) who received Pell grants are eligible for $20,000 in student debt cancelation. Borrowers with the same income levels who did not receive Pell grants are eligible for $10,000 in debt cancelation.
Income is based on borrower’s Adjusted Gross Income (AGI) for either 2020 or 2021 (whichever is lower). This information can be found on Line 11 of IRS Form 1040.
In addition, the pause on student loan repayment, interest, and collections for all borrowers has been extended for the final time through December 31, 2022, with payments resuming in January 2023.
Loan Eligibility:
Federal student loans disbursed by the U.S. Department of Education prior to July 2022 are eligible for debt cancelation. These include undergraduate, graduate, and Parent PLUS loans. Private student loans do not qualify.
How It Will Work:
The Administration plans to release an application for borrowers to submit their income and loan information in early October. The Department of Education expects debt relief will take 4-6 weeks after applications are submitted and recommends that information is submitted by November 15 to have it processed before the payment pause expires. Some borrowers may have their loans automatically forgiven.
The application for debt relief is open, you can apply by visiting studentaid.gov/debt-relief/application. Borrowers are also encouraged to make sure their contact information is up to date in the federal student loan portal. Your loan forgiveness may have automatically processed using information from other Department of Education Programs, without the need for submitting the online form. If you have already received a notification from the Department of Education, you do not need to take further action.
Additionally, borrowers do not have to take any action to keep their student loans on pause. It will be automatic.
Additional Relief:
- Income Driven Repayment Plan Cap: Monthly payments for undergraduate loans will be capped 5% of a borrower’s discretionary income, (half the rate that borrowers must pay now under most existing plans.) The average annual student loan payment will be lowered by more than $1,000 for both current and future borrowers.
- Increase in Non-Discretionary Income Limit: 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 a monthly payment.
- Monthly Interest Loan Forgiveness: As long as minimum payments are being made (even if that payment is $0), monthly interest will not accrue, preventing loan totals from growing over time.
- Future Loan Forgiveness: Original loan balances of $12,000 or less will be forgiven after 10 years of payments, instead of 20 years, allowing nearly all community college borrowers to be debt-free within 10 years.
As always, my office stands ready to assist. Please call my Hartford office at 860-278-8888 or send us an email here.