The Biden Administration has just announced additional measures to offer Debt Relief to those with Federal Student Loans. Under the announced plan, those with federal student loans held by the Department of Education will be entitled to $10,000 of debt cancellation (or $20,000 if the individual is the recipient of a Pell Grant while in college). This is available to those with annual income of less than $125,000 or $250,000 for married couples or heads of households.
Applications for this relief have not been finalized and may take some time, but the announcement assures that they will be available prior to the extension of the pause on federal student loan repayment – which is 12/31/22 (it is also possible that this executive action by the President may be challenged in Court and delayed).
To determine if you may qualify for this relief:
- Obtain their student aid report (NSLDS) from www.studentaid.gov (download the .txt version)
- Create an account with us at: https://studentloantoolbox.net/abelsonlawoffices
- Upload your NSLDS report into our account for a complete analysis of your loans
- We will then schedule an in person or virtual conference to discuss your options
Perhaps even more significant than the debt cancellation, is the new rule in the announcement for calculation of IBR (income based repayment) plans which reduces the calculation of discretionary income from 10% to 5% for undergraduate loans. This would substantially reduce the monthly required payments for borrowers under such plans.
While this administrative relief will take some time to be enacted and most likely not begin until sometime in 2023, it is particularly welcome news.
If you are currently in default on federal student loans, please contact us to discuss a rehabilitation plan to resolve the default immediately, so that that you are eligible for any of these plans.