What to Know About the New Student Debt Relief Plan
In August, the White House announced the Student Debt Relief Plan, a comprehensive policy that will implement a series of debt forgiveness measures for eligible federal loan borrowers. As a potential recipient of this relief, we want to make you aware of key details of this plan, how it may apply to you, and important next steps.
Here’s what you need to know:
- Federal Pell Grant recipients will receive up to $20,000 in debt relief. Non-Pell Grant recipients will be given up to $10,000 in debt relief. Borrowers with loans from the U.S. Department of Education are eligible for this relief if their individual income is less than $125,000 or $250,000 for households.
- For current and future borrowers, the plan will forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with original loan balances of $12,000 or less.
- Coverage will be given for current borrower’s unpaid monthly interest to ensure that no borrower’s loan balance will grow as long as they make their monthly payments.
- A one-time update to the Public Service Loan Forgiveness (PSLF) program provides a time-limited policy to forgive all outstanding debt for eligible federal student loan borrowers who have served at a non-profit, in the military, or in federal, state, Tribal, or local government for at least 10 years, including non-consecutively. Eligible borrowers must apply to PSLF before the temporary changes end on October 31, 2022. Click here to learn more about the time-limited changes and how to apply.
- An extension has been made to the federal student loan repayment program one final time through December 31, 2022. Borrowers should expect to resume payment in January 2023.
An online application process for borrowers to claim relief will be available by early October. In the meantime, we encourage you to:
- Follow these steps to determine your eligibility and prepare for your application.
- Sign-up to receive notifications from the U.S. Department of Education on when the application is available.
- Note that the above information captures highlights of the plan and is not a complete overview. Learn more about the program’s full details and how they may apply to you.