What You Need to Know About The New Student Loan Forgiveness Plan

On Wednesday, August 24, President Biden said the federal government will forgive up to $20,000 in federal student loans for millions of people. However, not everyone with debt will be able to get relief.

The action includes rules that will keep the debts of people with high incomes at the same level. Those who qualify will have to deal with the confusing federal loan servicing system and keep a close eye on their accounts and credit reports to make sure nothing is wrong.

It also extends the break in monthly student loan payments, so borrowers won’t have to start paying again until at least January 2023. It also gives details on a new plan to make an income-driven repayment plan that is more affordable.

Read on to learn how you can participate in this once-in-a-lifetime grant.

Do you qualify?

People who are single and make less than $125,000 will be able to get $10,000 in debt relief. If you are married and file your taxes together or if you are the head of the household, and your income is less than $250,000, you qualify. Your adjusted gross income will determine if you are eligible. Your income from 2020 or 2021 can get you in, but your income from 2022 won’t. If you got a Pell Grant and your income met these requirements, you could get an extra $10,000 in cancellation.

As the implementation details have yet to be put into place, you’ll have to wait a bit to inquire about your specific loans. Stay tuned to Not So Common Cents for the details as they unfold.

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