![]() ![]() It would raise the amount of income that is considered non-discretionary and, therefore, protected from repayment. ![]() It would cut in half - from 10% to 5% of discretionary income - the amount that borrowers have to pay each month on their undergraduate loans, while borrowers with both undergraduate and graduate loans would pay a weighted average rate. The rule would protect more income from payments. The Department is also proposing a rule to create a new income-driven repayment (IDR) plan that will substantially reduce future monthly payments for lower- and middle-income borrowers. Once a borrower completes the application, they can expect relief within 4-6 weeks.Įveryone who is eligible is encouraged to file an application. If borrowers would like to be notified when the application is open, they must sign up using the agency’s subscription page. The Department will be launching a simple application, which will be available by early October. ![]() Borrowers should plan to resume payments in January 2023 (Federal Student Aid’s debt relief plan web page). According to estimates, the President’s plan would erase the federal student debt of roughly 20 million individuals ( White House fact sheet, Secretary Cardona’s explanatory video, and President’s Twitter thread and outreach call video ).Ĭoinciding with the President’s announcement, the Department announced a final extension of the pause on student loan repayment, interest, and collections through December 31, 2022. Nearly one-third of borrowers owe less than $10,000, and about half owe less than $20,000. More than 43 million people have federal student debt, with an average balance of $37,667. Borrowers who met those income standards but did not receive a Pell Grant are eligible for up to $10,000 in relief ( press release, Department’s Twitter thread, background press call transcript, press briefing transcript, and legal memoranda: Education and Justice ). Borrowers with annual income during the pandemic of under $125,000 (for individuals) or under $250,000 (for married couples or heads of households) who received a Pell Grant for college are eligible for up to $20,000 in cancellation. On August 24, to address the financial harms of the pandemic and help borrowers at high risk of delinquencies or default once payments resume, President Biden announced targeted student debt cancellation for borrowers with loans held by the Department of Education. ![]()
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