Who is eligible for student loan relief given by Biden’s Administration?
If your loan is held by the Department of Education and your income is less than $125,000 for an individual or $250,000 for a family, you may be eligible to have up to $10,000 forgiven in student loan. The maximum amount that may be forgiven if you obtained a Pell award, which is offered to undergraduates with the greatest financial need, is $20,000. If you are a dependent student and a current borrower, your eligibility for relief will be determined by your parents’ income rather than your own.
Do I have Pell’s grant?
The Biden plan will allow around 27 million student loan borrowers who were eligible for Pell awards to have up to $20,000 in debt cancelled. Pell grants are particular government scholarships for low-income Americans; they can now get up to $6,895 each year for around six years. According to the Department of Education, nearly every Pell Grant applicant comes from a household with an annual income of less than $60,000. This group of borrowers is believed to have more difficulties repaying their loan than other borrowers. Even while Pell Grants themselves are often not repaid, beneficiaries frequently take out extra student loans.
Check any communications that outline your FAFSA award to see if you got a Pell grant.
Will the freeze on Student Loan Payments be extended?
One further extension will be made to the payment freeze, through December 31. The freeze was instituted in 2020 as a measure to assist those who were having financial difficulties during the COVID-19 epidemic, and it has since been repeatedly extended. It was supposed to end on August 31. Until repayments begin, interest rates will stay at 0%. People who were behind on their payments before the outbreak will immediately be reinstated in good standing under a previous extension given in April.
How do I apply for the student loan relief?
Although specifics have not been made public, keep a watch on the federal student aid website in the coming days for further information.
What about the tax, do I need to pay tax for amount I am forgiven in student loan?
No. Not till 2025
What if I have already paid my student Loan – Do I get something as relief?
Here things get a bit tricky. Only individuals who are currently in debt for education are anticipated to be eligible for the debt relief. However, the Federal Office of Student Aid advises that if you’ve voluntarily made payments after March 2020, when payments were suspended, you can ask for a refund for those sums. To obtain a refund, get in touch with your loan servicer.
What if I am not in a position to pay even after the relief in my Student Loan?
Borrowers who are unable to pay, run the danger of falling behind on payments and finally defaulting. This may lower your credit score and disqualify you from receiving further help in future. Check to see whether you qualify for an income-driven repayment plan if you are having financial difficulties. More details are available here.
The Biden’s idea also includes a suggestion that would let borrowers of undergraduate loans choose a monthly payments limit of 5%. It can take a year or more to adopt proposals like these, and it’s unclear what the fine print will be. The Public Service Loan Forgiveness Program, which you can learn more about here, may also be available to you if you have previously worked for a government agency or a non-profit organisation.
Hope this helps.