If you’re one of the millions of borrowers hoping to pay off—or at least reduce—student loan debt, this may be your best chance yet to make some significant headway.
Right now, eligible federal student loan borrowers have an opportunity to benefit from a handful of relief initiatives issued by the Biden administration. These include a new student loan forgiveness plan aimed at low- and middle-income families, and an extension of the payment pause and interest freeze placed on student loans at the start of the Covid-19 pandemic.
There’s been a lot of exciting news lately for student loan borrowers, some of whom have been trying for years to get out from under their old debt and move on to new financial goals. Trying to track down which current and future opportunities pertain to you can be somewhat confusing.
With that in mind, here’s some key information on deadlines, eligibility requirements and program updates borrowers should be aware of moving forward.
One-Time Student Loan Debt Relief Plan
This new one-time student loan debt relief plan is limited to federal student loan borrowers who earn less than $125,000 per year, or married couples or heads of household who earn less than $250,000. (You can use your adjusted gross income (AGI) from your 2020 or 2021 tax return to apply.)
Borrowers who received a Pell Grant could have up to $20,000 forgiven; other borrowers may see up to $10,000 forgiven.
The Department of Education announced today that the application process is officially open at studentaid.gov/debt-relief/application. This means you can formally apply now and submit your application for processing.
If you want to check your eligibility first or find answers to a long list of frequently asked questions, visit studentaid.gov/manage-loans/forgiveness-cancellation/debt-relief-info for more details.
There have already been legal challenges and changes to Biden’s forgiveness plan, so it’s also a good idea to sign up for Department of Education updates at www.ed.gov/subscriptions.
You’ll have until Dec. 31, 2023, to submit your application—but the sooner you sign up, the sooner you can expect results. Education Department officials have suggested borrowers apply before November 15, 2022, so their relief may be processed and any remaining payments reduced before the current payment pause ends.
Payment Pause and Interest Freeze
During the August announcement of the new student loan forgiveness plan, the president also extended the student loan payment pause and interest freeze to December 31, 2022.
Here’s what that could mean for you:
- If you’re trying to pay off your loans ASAP, or you want to reduce the amount of interest you’ll pay overall on your student debt, keep in mind that every dollar you pay during this period will go directly toward reducing your outstanding balance.
- If you’ve been taking advantage of the payment pause to pay down high-interest credit card debt, or you’ve been socking away some extra money in a high-yield savings account, you’ve got a little more time to work on these or similar strategies.
- If you’ve been struggling to make your payments, and the pause was a welcome break, you’ll have until the new year to put your student loan debt back in your budget.
Limited PSLF Waiver
Critics have long complained that the rules governing the Public Service Loan Forgiveness (PSLF) program are too arduous for applicants and that the program is poorly administered. In response, President Biden announced the Limited PSLF Waiver in 2021, with the goal of temporarily relaxing the rules for qualifying student loan borrowers.
If you hope to benefit from this action, the clock is ticking: The waiver is only available through October 31, 2022. So if you haven’t already, it’s time to head to studentaid.gov/PSLF to see if you qualify and sign up.
This is a different type of forgiveness than the new one-time debt relief initiative the president announced in August. PSLF is only for those who work full-time in public service for a federal, state, tribal, or local government, or for a nonprofit organization.
The Biden administration is reportedly drafting new regulations that may become available in 2023 that could further benefit PSLF program applicants.
How Can Octavia Help?
Octavia is always here to help in whatever way we can. We can assist you in finding the programs that could reduce your student loan burden, and if you’re having trouble coming up with a plan to pay off your debt, our team of experts can provide proven strategies and professional oversight.
Feel free to reach out to our office to schedule a consultation. We look forward to hearing from you.student debt reliefstudent loan forgiveness