Federal Student Loan Forgiveness 2024: During the 2020 presidential campaign candidate Joe Biden pledged a student loan forgiveness plan. A year after taking office, President Biden revealed his plan to cancel the debt of $10k per borrower and $20k for Pell Grant recipients.
The student loan forgiveness was limited to Americans earning under $1,25,000 per year or $250,000 for married couples. Here is the detailed overview.
What Is Student Loan Forgiveness?
Student Loan Forgiveness is a popular scheme in the United States. Loan forgiveness is a program that removes the burden of repaying the debt from student loan borrowers. These types of loan forgiveness come with strict eligibility criteria for borrowers.
Student Loan Forgiveness Eligibility Check
To avail of the benefits of student loan forgiveness, you must meet the following eligibility criteria:
- You must have federal student loans to qualify for a forgiveness scheme.
- Private student loans are not eligible for this program.
- You must be a permanent resident of the United States to avail of the benefit.
How Does Student Loan Forgiveness Work?
Student loan forgiveness means the borrower no longer needs to repay the loan amount. Though all kinds of student loans can theoretically be forgiven, the government can decide which types of loans to forgive. This means student loans (federal loans in the US) are generally only forgiven for government institutions, while private loans are not.
Student Loan Forgiveness Programs Types
There are different types of student loan forgiveness programs available to students, including:
- Income-Driven Repayment Forgiveness: If you are not working in a service position, you may still be able to get your student debt forgiven. However, it will take a long time to repay the loan amount. These types of loan payments are set at a percentage of your monthly income. After 20 to 25 years, if any unpaid balance remains, it will be forgiven.
- Public Service Loan Forgiveness: This type of loan forgiveness program is designed only for people who work in public service jobs either in government organizations or non-profit sectors. To avail of the benefit under the PSLF program, you must first make 120 qualifying payments while you are working for a qualified employer.
- Profession-Based Loan Forgiveness: These types of loan forgiveness programs are available for borrowers in some specific professions like teachers, defense sectors, etc.
- Forgiveness in Case of Specific Reasons: This type of loan amount is forgiven in case of specific scenarios. If the borrower files for bankruptcy, passes away or suffers a total and permanent disability, the loan amount will be forgiven by the government.
Federal Student Loan Forgiveness Pros & Cons
Here we have shared the pros & cons of Federal Student Loan Forgiveness:
Pros:
- You will get some relief from burdensome debt.
- It will encourage you for public service jobs.
- It increases disposable income or spending.
Cons:
- It takes toomuch time to qualify.
- It may increase taxable income.
- It can accelerate interest collection (IDR Plans).
How Do I Get Loans Forgiven?
There are two basic steps to forgive your student loans. First, you gather all your loans into one debt. Then, you apply for your student loan forgiveness by filling out a special form, the Federal Student Aid’s Public Service Loan Forgiveness & TEPSLF Application.
Second, for those who have IDR plans, your payment is calculated as you go, and your loan servicer will alert you when you have reached the amount needed for forgiveness.
Conclusion
The federal student loan forgiveness program is a good initiative by President Joe Biden. Through the student loan forgiveness program, about 4.75 million borrowers have received $167 billion worth of student loan forgiveness. Check your loan type and scheme benefits.
Frequently Asked Questions
- Who Pays For Federal Student Loan Forgiveness?
Ans: The government of the United States pays for student loan forgiveness.
- Can Student Loan Interest Be Forgiven?
Ans: Yes, student loan interest can be forgiven only if the loan itself is forgiven.
- Is My Student Loan Going to Be Forgiven?
Ans: If you have student loans that are repaid over 20 to 25 years, those loans may be forgivable.
- How Many Types of Student Loan Forgiveness Programs?
Ans: There are several types of student loan forgiveness programs including, Income-Driven Repayment Forgiveness, Profession-Based Loan Forgiveness, etc.