Do I Get Student Loan Forgiveness if I’m Still in School?
The federal student loan relief plan announced on Aug. 24, 2022, by the Biden administration won’t just apply to former students with college loan debt — if it is enacted at all. Loan forgiveness may also become available to students who are still in school. However, the program has been challenged by two significant lawsuits which are now being heard by the Supreme Court. Arguments began on Feb. 28, leaving the program in a state of flux.
A White House fact sheet accompanying the announcement indicated that current students with loans “are eligible for this debt relief.” It added that borrowers who are dependent students “will be eligible for relief based on parental income, rather than their own income.” Eligibility for independent students using their own income to pay for college will be based on that income, Fortune reported.
Income is a critical piece of the equation because eligibility for loan forgiveness is restricted to borrowers in a certain earnings bracket. As the fact sheet noted, the Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients. Of course, this relief is entirely dependant on the Biden administration prevailing in court.
“Borrowers are eligible for this relief if their individual [yearly] income is less than $125,000 ($250,000 for married couples),” the fact sheet outlined. “No high-income individual or high-income household — in the top 5% of incomes — will benefit from this action.”
As Forbes indicated: “If you never finished your degree or are still in school, you can still qualify as long as your loans were disbursed by June 30, 2022.”
Take Our Poll: Do You Think Bankruptcy Is an Acceptable Way To Escape Student Loan Debt?
More: If Biden’s Student Loan Forgiveness Plan Is Killed, What’s Next for Borrowers?
Given the legal challenges faced by the student loan forgiveness program, the Biden administration also extended the pause on federal student loan repayments — borrowers can expect relief in this form until at least August of 2023. The pause includes both former students and students currently in school.
This story has been updated with additional information.
More From GOBankingRates
- 5 Expensive Renovations Homeowners Always Regret
- Financial Insight in Your Inbox: Sign Up for GBR's Daily Newsletter
- 3 Ways to Recession Proof Your Retirement
- 7 Things You Must Do To Create a Plan for Your Money
