S T U D E N T D E B T M O D I F I C A T I O N S

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Welcome to Student Debt Modification

Student Loan Debt Relief

Student Loan Debt Relief

September 8, 2022 admin 0 Comments

President Biden announced a new one-time new 3 Part PLAN to help working and middle-class federal student loan borrowers. Student loan cancellation will be granted based on income for loans held by the Department of Education. To determine if you received a Pell Grant log in to your StudentAid.gov account to view your account dashboard for a breakdown of your financial aid.

  1. Final extension of the student loan repayment pause through December 31, 2022, with payments resuming in January 2023.
  2. Providing targeted debt relief to low- and middle-income families help borrowers at highest risk of delinquencies or default once payments resume, the U.S. Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for households.
  3. Make the student loan system more manageable for current and future borrowers Income-based repayment plans have long existed within the U.S. Department of Education. However, the Biden-Harris Administration is proposing a rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers.

The rule would:

Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is down from the 10% available under the most recent income-driven repayment plan.
Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment.
Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
Cover the borrower’s unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.

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