Image Source: cnbc.com
Written by: Ethan Price
September 6th, 2022
Last Wednesday, on August 31st, President Biden announced a plan to grant some sort of forgiveness to students who have taken out federal loans to aid in their payment for university. The plan has not been put into place just yet and most likely will not take effect until January of 2023, so what should students know in the meantime?
First and foremost, Biden has decided to extend the COVID-19 Emergency Relief and Student Aid initiative through the end of the calendar year. Automatic loan payments have been paused since March of 2020, with lenders being allowed to collect absolutely zero interest from students on their loans.
To qualify for loan forgiveness, students must be able to check a few boxes. Students must have taken out their loans before June 30th, 2022. "Borrowers with federal student-loan debt are eligible for up to $10,000 in relief if they earn less than $125,000 a year, or under $250,000 a year for couples (WSJ)." Income will be checked for either 2020 or 2021. Additionally, if a student has received any Pell Grants, they are eligible for $20,000 in relief. In most states, including Michigan, loan forgiveness is tax exempt. Most loans issued by the William D. Ford Federal Direct Loan Program should qualify. This includes "Direct Stafford Loans, and all Direct subsidized and unsubsidized federal student loans" as well as Parent Plus and Grad Loans (CNBC).
For students with less than $10,000 to pay in Federal Loans, congratulations, as you are now debt free. On the flip side, students who have paid off their student loans as of recent will not be reimbursed.
For students who believe they qualify for loan forgiveness, sit tight and wait for your lender to contact you with more information in the coming months.
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