Bob Miller is a long-time financial consultant and Women’s Money Matters Advisory Group member and we appreciate his time and expertise answering these student loan forgiveness FAQs.
How Student Loan Forgiveness Impacts You
According to the American Association of University Women, women hold the majority of student loan debt in the United States, totaling more than $900 billion. When they start school, women take on greater debt than their male counterparts, and when they graduate, are already faced with higher income gaps, creating even more disparity.
Women’s Money Matters has heard from its participants over the years about the strain that student loan payments cause on their budgets.
On August 25, President Biden announced a new student loan forgiveness initiative to assist Americans burdened by their mounting student loan debt. Women’s Money Matters spoke with our Advisory Group Member Bob Miller to dive into some of the details about the effects this initiative will have on individuals.
What is the initiative that President Bident outlined and how do I know if I qualify?
The forgiveness plan as proposed will eliminate $10,000 in student loan debt for individuals earning less than $125,000 per year (or $250,000 if you’re married and file jointly).
If you’re a Pell Grant recipient, you may be eligible for an additional $10,000 loan forgiveness. If you are not sure if you received a Pell Grant, you can verify that you’re a Pell recipient by accessing the link: www.studentaid.gov and clicking on the section “My Aid.”
All loans must have been taken out prior to July 1, 2022 to qualify.
How will this impact my monthly payments?
In the case of Income Driven Repayment Loans, or IDR Loans, monthly payments would be reduced to 5% from the current 10%, with any remaining balance forgiven after 20 years of payment.
How can I make sure to take advantage of this initiative?
The Department of Education should have access to your income data and automatically grant the loan forgiveness. If that doesn’t happen, you can visit the Department of Education’s loan website to submit a forgiveness application, which will be available in early October 2022.
Do I need to start making payments on my loans in the meantime?
No, the current federal “payment pause” will be extended one final time to December 31, 2022. In the meantime, be sure to verify that all your contact information is up to date with your loan servicer using the Department of Education’s loan website.
What if I have private loans?
You should look into refinancing options before the Fed raises its rates.
Women’s Money Matters understands how confusing the student loan process can be and is available to offer support to all prior participants navigating this new development. You can reach out to us at info@womensmoneymatters.org
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