Who Still Qualifies For Debt Relief
Under Biden’s plan, eligible individual borrowers who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years will see up to $10,000 of their federal student loan debt forgiven.
If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness.
Federal Direct Loans, including subsidized loans, unsubsidized loans, parent PLUS loans and graduate PLUS loans, are eligible.
While borrowers with FFEL and Perkins loans whohave kept paying their bills on time remain ineligible, defaulted federal loans taken outunder any program are eligible.
Is There A Service Commitment
Most private companies dont require you to sign your life away. Instead, they offer the student loan repayment perk in the hopes youll want to stay. But its not like joining the military which has its own repayment programs, by the way.
However, most isnt all. A few rare companies do require a commitment in exchange for repayment assistance.
For example, Memorial Hermann, a Southeast Texas-based health system, offers a generous $400 per month to eligible clinical staff. But, in return for its investment, the company requires a two-year commitment after the final payment.
Its more common to find companies that require a commitment in exchange for tuition assistance or tuition reimbursement than student loan repayment, because the investments are sometimes higher.
But no company can force you to stay. Rather it could ask you to repay its investment if you dont fulfill your commitment. But, again, this is rare. Just ensure you know what youre signing up for.
Where To Find Grants
There are a variety of grant options available, but you have to know where to look.
Fortunately for you, we took the guesswork out of it. All you have to do is find the category below that applies to you and click on it to see the grant options that are available to you.
For career-based grants, the fields in which you will find the most options are:
You can start by looking into profession-based grants offered by departments of the federal government, and then approach your school for any opportunities they have access to. You can check with your state, and then with your employer.
You can also seek out civil rights and advocacy groups for which you meet the criteria of grants they may offer.
Some private employers offer student loan forgiveness, grants, and scholarships to their employees on a monthly basis.
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Create Your Personal Student Debt Relief Program
Arent you curious about how much you could save with a student loan refinance? Would you like to calculate the exact savings youll enjoy if you pay your student loan early?
You dont have to wait for Congress or your employer to start your student debt repayment program. Find out how you can repay your student debt faster and reduce your interest payments with a student loan refinance.
Andrew is the Content Director for SuperMoney, a Certified Financial Planner®, and a Certified Personal Finance Counselor. He loves to geek out on financial data and translate it into actionable insights everyone can understand. His work is often cited by major publications and institutions, such as Forbes, U.S. News, Fox Business, SFGate, Realtor, Deloitte, and Business Insider.
Assistant Professor Of Economics
No matter what you want to do with your life, I guarantee that youll need an education to do it, President Barack Obama said in a 2009 national address to students. Such guidance is regularly told to Black people: The way to get out of poverty and achieve middle class status is to get a college degree.
But a college degree does not eliminate the income gaps between white and Black workers. Black students finance their education through debt, and thus college degrees actually further contribute to the fragility of the upwardly mobile Black middle class. And because education does not achieve income parity for Black workers, the disproportionate debt Black students are taking to finance their education is reinforcing the racial wealth gap. Today, the average white family has roughly 10 times the amount of wealth as the average Black family, while white college graduates have over seven times more wealth than Black college graduates.
Most analysts believe there is a student debt problem in the United States, and even conservative scholars acknowledge some debt must be forgiven. Tuition is outpacing students ability to pay, and the share of students taking out loans to finance their degrees rose from roughly half to over two-thirds from 1993 to 2012, according to the Pew Research Center. Between 1993 and 2020, the average loan amount grew nearly three-fold, surpassing $30,000.
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How To Apply For Student Loan Grants
In general, you apply for student loan grants after graduation. However, some grants are available while youre still in school. Additionally, theres a wide range of scholarships that can help cover college expenses.
There are plenty of easy grants to get, however applying for them usually takes a bit of time. But in the end, its worth it to receive a free contribution toward your student loan debt.
The application process will vary based on the grant, but here are the typical steps you can expect to take:
These People Are Eligible For Student Loan Forgiveness But There Have Been Some Changes
The US Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible if their individual income is less than $125,000 or $250,000 for households, the plan says.
In addition to federal Direct Loans used to pay for an undergraduate degree, federal PLUS loans borrowed by graduate students and parents may also be eligible if the borrower meets the income requirements.
But there have been some changes to eligibility: The Biden administration scaled back who qualifies at the end of September, the same day six Republican-led states sued President Joe Biden in an effort to block his student loan forgiveness plan from taking effect.
Borrowers whose federal student loans are guaranteed by the government but held by private lenders will now be excluded from receiving debt relief. Around 770,000 people will be affected by the change, according to an administration official.
The Department of Education initially said these loans, many of which were made under the former Federal Family Education Loan program and Federal Perkins Loan program, would be eligible for the one-time forgiveness action as long as the borrower consolidated his or her debt into the federal Direct loan program.
On Monday, as the new program was officially launched, US Education Secretary Miguel Cardona was asked about the privately held student loans.
Grants To Pay Off Student Loans For Single Mothers
This one is a bit difficultthere arent a lot of student loan forgiveness programs specifically for single mothers.
However, if youre a single mom who needs student loan debt relief, any of the above may be an option depending on your career, the state you live in, and other circumstances.
Which leads us toâ¦
How Can I Get Student Loan Forgiveness From Covid
Since the Covid-19 crisis began, there has been an extended pause in federal loan payment collection and 0% interest on certain federal student loans. Payments are set to resume on January 1, 2023.
President Joe Biden also announced that up to $20,000 in federal student loans can be forgiven. Eligible borrowers who earn less than $125,000 annually can have $10,000 of debt forgiven borrowers who meet the same income requirements and also received a Pell Grant can have up to $20,000 forgiven.
Most borrowers will have to submit an application to request forgiveness. Applications became available in October 2022 and will be accepted until December 31, 2023.
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Tip Seven: Carefully Weigh The Pros And Cons Of Debt Consolidation And Refinancing
Whether youre rolling up multiple federal loans into one federal loan or into a private loan at a lower interest rate , there can be significant risks and benefits to combining your student debt. Perhaps the biggest danger to consolidating or refinancing is that you may lose some of the protections and benefits that you get with your original loans, such as eligibility into the PSLF program, forgiveness or an income-driven repayment plan.
One final word of advice: Watch out for scammers. You might get approached by seemingly legitimate companies offering you better terms and convenience if you send your loan payments directly to them. If youre looking for help navigating your payments and ensuring youre making smart decisions regarding your student loans, your Baird Financial Advisor is a great place to start.
Editors Note: This article was originally published April 2020 and was updated August 2022 with more current information.
The websites listed are not owned or associated with Robert W. Baird & Co. We have provided the links as a convenience and do not endorse any of the sites.
*No new FFEL Program loans have been made since July 1, 2010, but you may have an FFEL if you were attending school before that date.
Revised Pay As You Earn Repayment Plan
Much like PAYE, under this plan, your monthly payments are 10% of your discretionary income. Your outstanding balance is forgiven if you havenât repaid the loan in full after 20 or 25 years. The following types of loans are eligible for REPAYE:
- Direct Subsidized and Unsubsidized Loans
- Direct PLUS loans made to students, and
- Direct Consolidation Loans that do not include PLUS loans made to parents.
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Contraception And Infertility Research Repayment Program
Certain healthcare professionals may be eligible for the Contraception and Infertility Research Program, including doctors, nurses, physician assistants, graduate students, and postgraduate research fellows. Eligible borrowers must work in either infertility research or contraception research.
The CIR-LRP grant pays up to $35,000 of your principal and interest for each year of commitment to your research. You must commit to at least two years of conducting research focused on contraception or infertility. You may also receive up to 39% of the prior amount paid to yourlenders.
Can You Refinance For A Better Interest Rate
Usually, when you take out student loans, you have little to no credit historywhich impacts the interest rate on your loans. The higher your rate, the more your loans cost. But by now, you likely have a better credit history to qualify for a lower rate. Lowering your rate by even one percentage point could move up your payoff date and save you thousands.
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Armed Forces Loan Payment Programs
Many branches of the United State military offer loan payment programs that will pay off your student loans:
Each program is a little different, but will potentially pay off tens of thousands of dollars in student loans for you. As with other types of service-based loan repayment programs, these are specifically for federal student loans and not private loans.
National Institute Of Mental Health Grant
The National Institutes of Health Loan Repayment Programs were created by Congress to recruit and retain healthcare professionals in the fields of biobehavioral or biomedical research.Two loan repayment programs are available through the National Institute of Mental Health, or NIH.
One repayment program is for researchers at universities, medical centers, and other institutions not employed by the National Institute of Health. The other program is specifically for researchers employed by the National Institute of Health. These programs may repay loan amounts of up to $50,000 per year.
Regarding the non-NIH employed grants, the National Institute of Mental Health participates in four types of programs: clinical research, pediatrics research, health disparities research, and research in emerging areas critical to human health.
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Federal Health Service Corps
The newest National Health Service Corps possess many loan forgiveness programs having medical care masters that agree to are employed in government lack section. The level of the forgiveness hinges on the community too as the whether you performs complete-date or region-date, and exactly how enough time your satisfy their duties.
Take Advantage Of Employer Matches Tax Deductions And Credits
Check if your employer offers any type of student loan repayment assistancean increasing number of companies are offering varied programs as part of their employee benefits. Also, be sure when you file your federal taxes annually that you are applying the up to $2,500 allowable tax deduction on interest paid on student loans available by the federal government. This will help reduce your taxable income, too. If you work for a government or non-profit, you may be eligible for Public Service Loan Forgiveness .
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Getting The Nuts And Bolts Right
Once we finalized our research and design parameters, we found that creating an SLP benefit was not too complex. This ease of implementation, however, required getting key parameters right from the get-go, including eligibility, size, and duration of the program. For example, it was critically important to us to confirm that financial information remained private. We had to have honest conversations to find a monthly payment that was large enough to genuinely help our people while being reasonable enough to make the benefit possible for us to sustain in the long term. We also wanted recent graduates to receive loan assistance immediately so that our new hires are eligible from their first day at PwC, so many of our smaller decisions focused on that goal. Key details of our SLP benefit include:
Grants For Healthcare Professionals
Healthcare professionals often allocate a higher percentage of their monthly income to student loans than professionals in the law, engineering, and accounting industries.
Although healthcare administrators and nurses with graduate degrees may have less of a student loan burden compared to some of their peers, many borrowers who pursued a degree in healthcare need assistance repaying their loans. Grants are available for a number of healthcare professionals, including licensed nurses, those who work in infertility research, and veterinarians.
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Student Loan Discharge Programs
Closed school discharge. You may qualify for loan discharge if your school closes. At the time of closure, you must have been enrolled or have left within 120 days, without receiving a degree. If you qualify, contact your loan servicer to start the application process. Youll need to continue making payments on your loan while your application is being processed. If youre approved, you will no longer have to make loan payments and you may be refunded some or all of the past payments you made on the loan.
Borrower defense to repayment discharge. Borrowers defrauded by their colleges may qualify for debt relief. Youll need to file a borrower defense to repayment claim with the U.S. Department of Education. If you qualify, you may have your loans automatically discharged, at the discretion of the Education Department, if your school was involved in clear, widespread fraud or misrepresentation that affected a broad group of borrowers.
Total and permanent disability discharge for veterans. Veterans who are totally and permanently disabled will have their student loan debt discharged. The process will be automatic unless they decline due to potential state tax liability .
Discharge due to death. If you die, your federal loans will be discharged once a death certificate is submitted to your loan servicer. Your parents PLUS loans used to pay for your schooling will be discharged if the parent who holds the loan or you die.
What To Know About The Student Loan Forgiveness Application
The Biden administration is describing the application for federal student loan forgiveness as short and simple.
President Joe Biden launched the official website on Monday after announcing in August his decision to cancel up to $10,000 in student loan debt for individuals making less than $125,000 a year or as much as $20,000 for eligible borrowers who are also Pell Grant recipients.
Weve worked really hard to make this application simple and straightforward. We kept the number of questions to a minimum and designed it in collaboration with user testing, a senior administration official said while previewing the application.
Here are some other notable things about the process:
- Borrowers will not need to log in with their FSA ID.
- No documents will need to be uploaded.
- You will be able to fill it out on either a computer or your mobile device.
- It will be available in both English and Spanish and accessible to people with disabilities.
The form to apply includes information on the debt relief, who qualifies and how it works. It asks applicants for information including their full names, Social Security number, date of birth, phone number and an email address.
A second administration official previously said that the vast majority of borrowers, nearly 95% with qualifying loans, meet the income requirement, adding that there will be strict fraud prevention measures in place.
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