BIG news on the Student Loan Debt front!
Huge! As in first-time-in-US-History event!
President Biden announced on August 24th that $10K in Student Loan Debt would be completely forgiven for individuals who hold Federal Student Loans, and $20K in Student Loan Debt will be completely forgiven for those with debt from PELL Grants.
Student debt, which now totals approximately $1.7 trillion, has exceeded credit card debt in this country. The New York Times’ reported that the benefits of this act will “largely go to the middle class.” “According to independent analysis, the people eligible for debt relief are disproportionately young and Black. And they are concentrated in…households earning between $51,000 and $82,000 a year.”
AND, student loan forbearance we’ve been experiencing since The CARES Act was passed in March of 2020, due to the pandemic, has been extended one final time, to expire at the end of 2022. Translation: you currently do not have to make any payments on your federal student loans through the end of this year if you’re un-able to and will have the bonus of zero interest accruing the entire forbearance period. (If you’ve continued to pay during the forbearance, you will essentially pay them off faster, as you’ve been making payments all of your payments during the pause interest-free!)
BUT THAT’S NOT ALL. The new policy also helps to address the root cause of the issue of compounding student loan debt amounts by capping interest for current and future loans at 5 percent of income, half of the current rate. This means that those who still have a balance on their loan after today’s forgiveness may be able to lower their average annual payment by more than $1,000.
Read below for the rules and restrictions on the latest forgiveness policy.
This policy affects up to 43M borrowers, wiping out the balances of 31% of all student loan debt holders.
IF YOU HAVE STUDENT DEBT YOU WANT TO READ BELOW
Restriction #1: Income Limits/Filing Status
$125K/annually or less for Single filers
$250K/annually or less for Married or Head of House filers
Restriction #2: Privately held student loans are exempt.
If you have those, consider consolidating to a lower interest rate if you haven’t already.
Next Steps: An application to apply for the new forgiveness will be available soon, sign up for updates on the process at https://www.ed.gov/subscriptions
Unlocking Abundance 