Dear Friend, This week, I am devoting my entire weekly e-Newsletter to student loan forgiveness – and primarily President Biden’s plan to erase $10,000 in student loan debt, and up to $20,000 for recipients of Pell grants. President Biden’s plan is a potentially life-changing policy that will give student borrowers what the president calls “breathing room” – a level of financial security that allows them options, benefiting both individual borrowers and the overall U.S. economy. Last week, I held an online webinar with a senior official of the Department of Education to go over the Public Service Loan Forgiveness (PSLF) Program. For those eligible for the program, the October 31 deadline is fast approaching. You can watch the webinar here. Find more information about PSLF at: https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service. For the new debt-relief program, please review the following information and, if you have questions, contact the Department of Education or my office.
President Biden recently announced his Administration’s plan to relieve up to $20,000 in student loan debt if you received a Pell Grant and up to $10,000 if you didn’t. Today, I am sharing how working and middle-income folks can apply for that relief. Go to http://studentaid.gov/debtrelief/apply It takes less than 5 minutes. You don’t need to log in with an ID or to upload any documents. It is available on mobile devices and desktop computers, in English and Spanish. To apply: In English, visit: https://studentaid.gov/debtrelief/apply In Spanish, visit: https://studentaid.gov/es/debt-relief/application See answers to Frequently Asked Questions here: In English: https://studentaid.gov/manage-loans/forgiveness-cancellation/debt-relief-info In Spanish: https://studentaid.gov/es/manage-loans/forgiveness-cancellation/debt-relief-info Millions of working- and middle-income borrowers can apply for student debt relief right NOW at studentaid.gov/debtrelief/apply. Nearly 90 percent of relief dollars will go to individuals earning less than $75,000 per year. Individuals earning more than $125,000 per year or households earning more than $250,000 per year are not eligible for this student debt relief program. The Education Department posted the application website last weekend – and more than 12 million people have already applied. That’s 12 million people on their way to getting extra “breathing room.”
The first part of the administration’s three-part plan is a final extension of the student loan repayment pause. Student loan borrowers have until December 31, 2022, to take advantage of the repayment pause. Payments will resume in January 2023. The second part of the plan, which is detailed above, provides relief to low- and middle-income families, by forgiving federal student loans for Americans making less than $125,000 per year and households making less than $250,000 per year. For the third and final part of the plan, the Department of Education is also proposing a rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers. The proposed rule would protect more income from loan payments. It would cut in half—from 10 percent to 5 percent of discretionary income—the amount that borrowers must pay each month on their undergraduate loans, while borrowers with both undergraduate and graduate loans will pay a weighted average rate. It would also raise the amount of income that is considered nondiscretionary income and therefore protected from repayment. The rule would forgive loan balances after 10 years of payments for borrowers with original loan balances of $12,000 or less, instead of the current 20 years under many income-driven repayment plans.
Additionally, the proposed rule would fully cover the borrower’s unpaid monthly interest, so that—unlike with current income-driven repayment plans—a borrower’s loan balance will not grow so long as they are making their required monthly payments. The plan would also simplify borrowers’ choices among loan repayment plans. The proposed regulations will be published in the coming days on the Federal Register and the public will be invited to comment on the draft rule for 30 days. This plan is designed to help those affected by the COVID-19 pandemic to ensure they are not in a worse financial position due to the national emergency. To that end, payments made during the student loan payment pause, which began on March 13, 2020, may be fully refundable. The following types of federal student loans with an outstanding balance as of June 30, 2022, are eligible for relief: - William D. Ford Federal Direct Loan (Direct Loan) Program loans
- Subsidized loans
- Unsubsidized loans
- Parent PLUS loans
- Graduate PLUS loans
- Consolidation loans, as long as all of the underlying loans that were consolidated were first disbursed on or before June 30, 2022
- Federal Family Education Loan (FFEL) Program loans held by ED or in default at a guaranty agency
- Federal Perkins Loan Program loans held by ED
- Defaulted loans (includes ED-held or commercially serviced Subsidized Stafford, Unsubsidized Stafford, parent PLUS, and graduate PLUS; and Perkins loans held by ED)
Student loan debt relief will have a big impact on middle-income people. Forty million people are eligible. Twenty million people could have their federal student debt wiped out completely. A post-high school education should be a ticket to the financial stability. But the cost of college has skyrocketed. Giving debt relief to borrowers as they start to repay their loans will give people the breathing room they need to be able to invest in buying homes and starting businesses. If you have federal student loans, go to studentaid.gov and apply today. As always, I remain.
Most sincerely, Steve Cohen
Member of Congress | 