You’ve undoubtedly seen a lot of chatter about the new student loan debt forgiveness program announced by the White House in late August. A lot of information is being shared about the program and what it means for people with student debt, so it’s helpful to have all the facts. Here is what you need to know about the new student loan debt forgiveness program.
Check Your Income Level
The first step is determining if your income level qualifies you for the new Student Loan forgiveness program. It only applies to individuals making $125,000 or less annually. You could be eligible for $20,000 debt forgiveness if you received a Pell Grant. Other student debts will be forgiven for $10,000. On top of that, the student loan repayment pause is extended one more time through the end of the year and will resume in January 2023.
Determine if Your Debt Qualifies
All federal student loan debt qualifies for this program. If you attended college and took out student loans but didn’t finish, you still qualify for the debt forgiveness program. This includes Pell Grants, government-owned FFEL Loans, and direct loans like Parent PLUS and Grad PLUS. Some loans in the Federal Perkins Loan Program held by colleges might be excluded along with all private student loans. Student loans already in default won’t qualify for the program.
Complete an Application
The application for the federal student loan forgiveness program launched on October 1st. You will have until December 31st to apply. To ensure you stay on top of news about student loan debt forgiveness, sign up for updates on the U.S. Department of Education website.
Reforms Moving Forward
There is good news for current students and future borrowers, too. This plan is making changes that will impact the student loan process moving forward. It reduces the monthly payment to 5% of the borrower’s discretionary income. It was previously 10%. And it guarantees that no borrower making under 225% of the federal poverty level will be required to make monthly payments. That is approximately $15 per hour. It will also forgive balances after ten years of payments, rather than 20, for borrowers with original loan balances of $12,000 or less. And loan balances will no longer grow as long as payments are made on time.
Do you have questions about the new student loan forgiveness program or completing an application? Having healthy credit will help you achieve all your future goals. Contact Best Credit RX or sign up today and become your own financial superhero.