Recently, the Biden administration declared that they will forgive $39 billion in student loan forgiveness debt for more than 800,000 borrowers.
This relief comes soon after the Supreme Court struck down Joe Biden’s more comprehensive effort to handle student loan debt.
Borrowers’ Path to Student Loan Forgiveness
The planned debt discharges by the Department of Education are more targeted than the first comprehensive forgiveness that President Biden sought to execute.
They are the consequence of fixes the government put in place in April 2022 to make sure that borrowers enrolled in income-driven repayment programs get a proper count of their monthly contributions, which go toward loan forgiveness.
Depending on whether they are on an income-driven repayment plan or a standard repayment plan, borrowers must make 240 or 300 qualifying monthly payments, or roughly 20 or 25 years’ worth of payments, before they are eligible for loan forgiveness under the 1965 Higher Education Act and federal regulations.
The administration has determined that inaccurate payment counts are a significant factor in why borrowers lose ground in their pursuit of loan forgiveness, and they are working to address this problem.
Direct Loans or Federal Family Education Loans maintained by the Department of Education, including Parent PLUS Loans, are among the loans covered by this debt relief.
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Income and Pell Grant Considerations
Individuals had to earn less than $125,000 annually to be eligible for the debt relief program, while married couples or heads of households had to make less than $200,000 annually.
If you were awarded a Pell Grant while attending college and your income qualifies, you may be qualified for debt forgiveness of up to $20,000.
On the other hand, you can be qualified for up to $10,000 in debt relief if you didn’t earn a Pell Grant while in college but still match the income requirements.
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