Student loan forgiveness plans announced by President Biden, Vice President Harris, and the US Department of Education include loan relief of up to $20,000 to facilitate working and middle-class federal student loan, borrowers.
Student Loan Forgiveness Plan
Loan forgiveness is an exemption of loan repayment, either in part or full. The question is how to claim this loan forgiveness. This article is a resource to answer this question.
Eligibility for Student Loan Forgiveness Plan:
Three-Part Student Loan Forgiveness Plan:
1.Extension of the Student Loan Repayment Pause
Since President Biden took office, nobody has paid even a single dollar as loan payments because an extension due to pandemic related economic crisis was given in student loan repayment by the Biden-Harris Administration.
2. Public Service Loan Forgiveness (PSLF) Program (to low- and middle-income families)
The US Department of Education would offer up to $20,000 in debt relief if you received Pell Grant in college and $10,000 if you did not receive Pell Grant in college.
This will smooth the transition back to repayment and help borrowers prevent default once payments resume. Or married couples.
This relief is granted to those borrowers whose individual income is less than $125,000 or $250,000 for heads of households or married couples.
Public Service Loan Forgiveness (PSLF) program exempts remaining federal student loans after 120 payments.
Transformation in Public Service Loan Forgiveness Program:
The Administration has proposed long-term changes to the Public Service Loan Forgiveness program. These changes in PSLF will facilitate loan forgiveness to borrowers working in public service.
It is specifically allowed that there will be more payments to be eligible for the PSLF program; this includes partial, lump sum, and late payments.
Moreover, the changes in PSLF program also allow specific deferments and forbearances, such as those for Peace Corps and AmeriCorps service, National Guard duty, and military service – to count toward PSLF.
These temporary changes to the PSLF program are beneficial as millions of borrowers have received additional credit for forgiveness.
The administration is also improving the existing student loan forgiveness program by reducing monthly payments.
How to Receive Debt Relief?
3. New Income-driven Plan For Existing And Future Borrower
There are income-based repayment plans within the U.S. Department of Education. A new income-driven repayment plan on Biden-Harris Administration’s proposal is in the pipeline; this new plan will significantly reduce monthly payments for lower and middle-income borrowers.
According to the rule proposed for a new income-driven repayment plan:
Teacher Loan Forgiveness Program
Teacher Loan Forgiveness Program will allow forgiveness of up to $17,500 on your direct subsidized and unsubsidized loans if you are a full-time teacher for five consecutive academic years in a low-income school or educational service agency.