Application for student loan forgiveness expected to launch next month
WASHINGTON (Gray DC) — The application to apply for the next round of student loan forgiveness is expected to launch next month. However, the US Department of Education has yet to announce when the launch will take place.
The department urges borrowers to sign up for alerts here to be notified when the application is posted. The US Department of Education calls this announcement a final extension. They are warning everyone to be ready to start payments again in January 2023.
President Joe Biden announced the extension of student loan forgiveness in August. Under the president’s new extension, people who earn less than $125,000 are eligible for a $20,000 rebate if they went to college on Pell grants. If they didn’t go to college on Pell grants, borrowers at this income level can receive $10,000 in student loan forgiveness. The program freezes payments until December 31, 2022. The Department of Education will also introduce a new program to allow people with undergraduate loans to cap repayment at 5% of their monthly income.
The Biden administration released a state-by-state breakdown of relief. He said borrowers in all 50 states would benefit as well as Washington DC and Puerto Rico.
The student debt forgiveness program began at the height of the pandemic and would have expired on August 31 had the Biden administration not granted the extension.
“We expect over 40 million borrowers to benefit and they are spread across the country. So big states, small states, red states, blue states, everywhere in between. Some of the states where we’re going to see a lot of benefits – in Michigan we’re going to see over 600,000 borrowers have their debt reduced entirely to zero. The same is true for about 750,000 people in Ohio, 1.6 million people in Texas and Florida, 2.4 million borrowers will see their debts reduced at least somewhat, with more than a million, 1.1 million people having their debt fully forgiven,” said Jordan Matsudaira, Deputy Assistant Secretary and Chief Economist at the US Department of Education.
Register here get notified when the student loan forgiveness application is available
Learn more about the Student Loan Forgiveness Extension here of the White House
Learn more about relief here from the US Department of Education
Republicans criticized the extension. Following the announcement, Senate Minority Leader Mitch McConnell (R-Ky.) called the aid a “slap in the face” and “unfair.”
He said, in part, in a statement: “Democrats in Washington have found another way to make inflation even worse, reward far-left activists, and do nothing for millions of working American families. who can barely walk on water. President Biden’s student loan socialism is a slap in the face to every family who sacrificed to save for college, every graduate who paid off their debt, and every American who chose a certain career path or volunteered to serve in our armed forces to avoid taking on debt. This policy is surprisingly unfair. The median American with student loans already has a significantly higher income than the median American as a whole. Experts who have studied similar earlier proposals have found that the overwhelming benefits of student loan socialism accrue to the highest-earning Americans. Democrats specifically wrote this policy to ensure people earning six figures would benefit.
Matsudaira contradicts the claim that the extension will have an impact on inflation. He said: “I think it’s important to bear in mind, first of all, that student loan repayments were halted during the break just to give borrowers more breathing room in the face of the pandemic. And, in January, this break will end. Borrowers are therefore going to have to start making lump sum payments. So just in terms of the income that people have, we expect it to go down rather than up overall. And so it’s unlikely to be inflationary. »
Asked about the threat of possible legal challenges stemming from the extension, Matsudaira said the administration was comfortable with the authority it was using to pursue the extension and would deal with any possible legal challenges. as they arise.
“It’s just a little more leeway to give people the comfort of being able to use a small portion of their income to invest in themselves. And we expect that to really make a difference for millions and millions of hard-working Americans who are going to be able to breathe a little easier in terms of the process,” he said.
Matsudaira said once the application is launched in October and eligibility is confirmed, borrowers could see their balances adjusted within 4 to 6 weeks.
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