How Much: Up to $10,000 for most borrowers and up to $20,000 for Pell Grant Recipients
Which Loans: The broad forgiveness announced 8/24/22 includes Parent Plus, Graduate Stafford and Plus, consolidation loans, and Stafford loans. It does NOT include private loans (including those that used to be federal and have been refinanced) or state loans or loans that have been paid in full unless they were paid in full by you during the COVID period and the loans were eligible for the COVID pause. It does include defaulted loans. We suspect – but can’t say for a fact – that later on they will include non-defaulted federal family education loan program loans.
How to Apply: You can apply now at https://studentaid.gov/debt-relief/application
Other Information: The loan has to have been fully disbursed by June 30, 2022 to be included. If you take out loans now they will NOT be forgiven. If you have paid in full loans or owe less than the forgiveness amount you are eligible for you will NOT get a refund. If you paid the loans off during the COVID period however you can call your servicer and request a refund of those payments. If the forgiveness amount is more than your current balance a refund of covid payments will occur automatically unless you paid the loans in full in which case you must call the servicer to request the refund. There is a $125,000 individual/$250,000 household income limit; the income will be based off adjusted gross income.
There will be a lot of scammers taking advantage of this narrative. Nobody will be calling you about this initiative and you certainly won’t have to pay a fee to get it and paying a fee won’t get it for you any faster. If you get such calls, report it to www.ftc.gov.
UPDATE June 30th, 2023
The President and the Department of Education have announced that they are going to continue the fight for some form of broad loan forgiveness via what’s called the negotiated rulemaking process. This process can take over a year. You can read the announcement and a primer to what negotiated rulemaking is below.
Link to the announcement about the process they are going to use to try again. https://www2.ed.gov/policy/highered/reg/hearulemaking/2023/negregpublichearingannouncement.pdf
For more information about the negotiated rulemaking process see here https://www2.ed.gov/policy/highered/reg/hearulemaking/hea08/neg-reg-faq.html
The Supreme Court has deemed the program unlawful.
**FAQ**
What if i received a refund due to COVID. Do I now have to pay it back?
Yes. You can either pay it as a lump sum or let the loan go back into repayment come October and pay it via a payment plan the loan might be eligible for.
So when will payments restart?
Interest will begin accruing on September 1st and payments will start being due in October. See our repayment restart page for more information
Will the White House take another shot at this?
We doubt it – one would think they will have used what they thought was their strongest legal argument out of the gate.
What’s next?
We anticipate that the administration will publish rules for a new, more generous, repayment plan very soon. Watch our repayment plan webpage for updates