The White House recently forgave up to $10,000 to student loan borrowers as part of a larger debt forgiveness program. The three-part plan delivers on President Biden's promise to cancel $10,000 of student debt for low-to middle-income borrowers. There are still quite a few questions to be answered, but here are some key points to know. As a Financial Advisor located in Murfreesboro, TN and serving individuals and families in Middle TN as well as many other states, we will continue to learn more about the forgiveness program in order to be a resource for clients.
Pell vs. non-Pell: Loan forgiveness of up to $10,000 is available to non-Pell Grant recipients and up to $20,000 for Pell Grant recipients. Only Federal student loans are able to be forgiven. Loans held through a private lender are ineligible for this program.
No Surplus: The amount of student loan forgiveness available depends on how much you still owe. If you only owe $8,000 in federal loans but qualify for $20,000 of relief, you will not be receiving the surplus of $12,000.
Income Cap: Borrowers with pandemic-era salaries under $125,000 (for individuals) or under $250,000 (for married couples or heads of households) are eligible for relief.
Loan Dates: Federal loans taken out after June 30, 2022, do not qualify for loan forgiveness.
Application Process: Depending on your lender, you may already be approved and have your account credited by the end of the year. However, an application is expected to be released in the coming weeks before the student loan payment pause ends on December 31, 2022.
Be Aware: As more details are released, scams may also pop up to attempt to take advantage of the situation. Remember to practice caution and good business sense if someone contacts you about your student loans.
Although these details help to better understand the basics of the forgiveness program, we will continue to learn more specifics in order to best serve clients. If you or your family are affected by the program, feel free to utilize us as a resource to plan for your future beyond the forgiveness program.