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The White House has announced a new plan that will provide loan forgiveness for some federal student loans. Under the plan, Pell Grant recipients can have up to $20,000 in loan dismissals, while other federal borrowers may be eligible for up to $10,000 in forgiveness. Private loan holders are not eligible for this program. There are income limits for loan forgiveness – $125,000 for individuals or $250,000 for married couples. The deadline to apply for this program is December 31st, 2023. Here’s what you need to know about this new plan.
Who Is Eligible?
You first need to know if you’re eligible for this program. If you’re a Pell Grant recipient, you’re automatically eligible for up to $20,000 in student loan dismissal. Other federal student loan borrowers may be eligible for up to $10,000 in forgiveness. Unfortunately, if you have private student loans, you will not be able to have your loans forgiven under this program.
You’ll also need to meet income limits to qualify for this program. You will likely qualify if you’re an individual and your household income is less than $125,000. If you’re married and filing jointly, your household income must be less than $250,000.
It’s important to note that this program is only available for loans before June 30th, 2022. So if you’re considering taking out a student loan after that date, this program will not be an option.
How Does It Work?
If you think you might be eligible for this program and meet the criteria mentioned above, the next step is to apply for forgiveness. You can do so by filling out the online application on the Department of Education’s website. The application process is relatively simple and shouldn’t take more than a few minutes to complete. Once you’ve submitted your application, the Department of Education will review it and get back to you with a decision within 60 days.
If your application is approved, the next step is to choose a repayment plan. You can either continue with your current repayment plan or switch to an income-driven repayment plan (IDR). IDR plans base your monthly payment on your income and family size, which means your monthly payment could be as low as $0 per month. You can read more about IDR plans and how they work here.
Once you’ve chosen your repayment plan, you must make payments until your loan balance reaches $0 and it’s fully forgiven.
The White House has announced a new plan to help eliminate some of your student loans! Suppose you have federal student loans and meet the eligibility requirements mentioned above. In that case, you could qualify for up to $20,000 in student loan forgiveness (Pell Grant recipients) or up to $10,000 in forgiveness (other federal borrowers). This program is unfortunately not available for private student loans but if you think you might be eligible, make sure to fill out the online application before December 31st, 2023.
For more information, visit the Department of Education’s website.