The Biden Administration's decision to cancel a portion of student loan debt is acknowledges the pain of stifling student loan payments that keep multiple generations from owning homes, affording a reasonable lifestyle, and feeling free of financial stress.
While the cost of attending college has tripled, federal support to help students afford those costs has not kept up. Federal aid used to cover 80% of college costs, it now covers less than 35%. The latest student loan debt relief is not enough, but it's a first step in the right direction.
How to apply
If the US Dept of Education has your income information, and that income makes you eligible for forgiveness, the process should happen automatically.
If you don't have your income on file, or you aren't sure, you'll be able to apply. The application isn't availble yet, and we'll update this page as soon as it is. You can sign up for alerts directly from the Dept of Edu here.
Federal student loan payments and interest accrual have been paused since the beginning of the pandemic, and were set to resume on August 31st. Under Biden's new student loan debt plan, payments will not resume until December 31, 2022.
He swears that this is the last time the payment pause will be extended, so if you benefit from this extension, you should plan on having only 4 more months of relief. Seriously, plan on starting to pay your student loans in January 2023!
💸 Want to know what to do with your student loan payments during the extension? Go here.
💸 Want to get ahead in preparing for student loan payments to resume in January? Go here.
1. The new Income-Based Repayment (IBR) Plan option would limit payments on undergraduate loans to 5% of discretionary income (previously 10%)
2. The definition of discretionary income will change to allow for lower payments
3. Balances under $12,000 will be forgiven after 10 years (previously 20) under the IBR Plan
4. Unpaid interest (for borrowers whose payments are $0 under the IBR Plan) will be forgiven as well
How to apply for the new IBR Plan
You can learn more about Income-Based Repayment Plans, log in to access your federal student loans, and apply here.
👇 Need a little help? Talk to a Bolder Money Coach about how to make the most of your student loan payments.