Big news arrived yesterday from the White House about the looming student loan repayment clock!
If you are waiting on your big CeCe Peniston moment.. It could "Finally" be on the way!
The pause on federal student loans has been extended for the "final time" through the end of 2022.
This means through December anyone pursuing Public Service Loan Forgiveness will continue to receive "free credits"! With the major caveat that you must enroll in the PSLF program, because it's not automatic.
On the forgiveness front, the Department of Education also announced a $10,000 debt cancellation for individuals with an annual income below $125,000 or $250,00 for married couples or heads of households.
Additionally, if you received a Pell Grant in college and are under the income threshold, you will be eligible for up to an additional $10,000 in debt cancellation.
**You will only receive relief up to your loan balance! So if you received a Pell Grant in college, and your Federal Student Loan balance is only $15,001.. You will only receive $15,001.
This debt cancellation is projected to help 43 million people reduce some of their financial burden, with approximately 20 million to receive total forgiveness. To be clear... you will need to put in a little work to get the relief.
There are 8 million borrowers that will likely receive automatic forgiveness because they are already enrolled in the PSLF program and are using an Income Based Loan Repayment Plan. Everyone else will need to apply once the final process is rolled out.
Here is your homework...
- Verify your student loan servicer. There has been a large kerfuffle with the student loan servicers abandoning ship in the last year.
- Log on to Studentaid.gov to see where your loans are, and while your at it verify they have the correct contact information for you!
- Apply for Public Service Loan Forgiveness. Forgiveness is only available if you ASK for it! Make sure the loan servicers know you work for a qualifying employer!
- Verify that you are on an Income Based Repayment Program. Those that are already on the program will automatically qualify for the debt cancellation if they meet the income thresholds!
If you are not eligible for the Public Service Loan Forgiveness, you want to get your ducks in a row before January. Know your repayment options and create a plan that will fit your needs!
If you have questions you are welcome to schedule a free 15 minute Student Loan Planning consultation!