What are trusted sources of information regarding this announcement?
The Office of Federal Student Aid (FSA) released a webpage explaining the announcements with answers to frequently asked questions. FSA will update their webpage more frequently as information becomes available.
For the $10,000 in forgiveness:
- Individuals with federal loans that are held by the Department of Education who make under $125,000 per year
- Married couples of heads of households earning less than $250,000 per year
For the $20,000 forgiveness:
- Borrowers who met one of the above parameters and received Pell Grants as college students are eligible for additional relief up to $20,000 of federal-held loan debt as of June 30, 2022
Do current college students qualify?
Yes, this plan includes current students with loans disbursed prior to June 30, 2022:
- Borrowers who are dependent students will be eligible for relief based on their parents' income
- Parent PLUS loans (federal loans for parents of undergraduate students) are also eligible under the plan
What loans to not qualify?
- Federal loans disbursed after June 30, 2022
- Private student loans issued by financial institutions such as banks, credit unions and credit card issuers
- Federal Perkins and Coe institutional loans owned by Coe College and managed by Heartland ECSI
Is there an application process?
Yes, but it is not available now. It will be available before the pause on federal loan repayment ends in December. The Education Department (ED) said it will be announcing further details on how borrowers can claim this relief in the weeks ahead.
How will I know when the application is live?
Borrowers who want to be notified when the application is open should sign up for notifications at the ED subscription page.
If I have to verify my income, how do I do that and what is the timeframe for processing?
Most borrowers will have to submit an application to verify their income. The ED said nearly 8 million borrowers already have income information on file and should qualify to have their debts canceled automatically.
If the borrower was a dependent in 21-22, ED will be using parental income information to calculate loan cancellation eligibility.
For those borrowers for whom ED doesn't already have existing income data, an application will be available before the pause on federal loan repayments end in December. ED said it will be announcing further details on how borrowers can claim this relief in the weeks ahead.
Will my monthly student loan repayment amount be less now?
For those on income-driven repayment plans, the amount borrowers have to contribute each month will be reduced from 10% of their discretionary income to 5%. The amount of income that is considered non-discretionary will be raised and, thus, provide more assistance.