By Curbstone | August 24, 2022

Things are looking a little rosier for students who have outstanding federal loans. Individuals making less than $125,000 per year will receive up to $10,000 in student loan forgiveness. Students who hold Pell Grants will be eligible to receive up to $20,000 in loan forgiveness.

This will impact tens of millions of Americans and may help them achieve some of their aspirational goals such as buying a home, starting a business, etc. Now this will not be automatic. The Education Department does not have income information for all of the Americans with student debt. The borrowers that are currently on an income-based repayment plan or similar programs have already submitted their income. People that have not will have to submit an application that the Department of Education has yet to release. Throughout the coming weeks there will be more information provided on next steps and how this program will work.

On top of the loan forgiveness, President Biden also deferred loan payments until December 31, 2022. This means that borrowers will not have to start paying back loans until the new year. It was also announced that there is a new income-driven repayment proposal that will cap repayment at 5% for undergraduate loans. We will learn more over the coming weeks and will share potential new information.