Protecting the Rights of Consumers
For Over 25 Years
Edelman, Combs, Latturner & Goodwin, LLC
Highlights of the new student loan relief plan announced August 24, 2022:
o The forbearance on federal student loan repayment is extended through December 31, 2022.
o You will receive federal student debt cancellation of $10,000 If: You're single and have taxable income of less than $125,000; or You are married and have household taxable income of less than $250,000.
o You will receive federal student debt cancellation of $20,000 If you received a Pell Grant for college and: You're single and have taxable income of less than $125,000; or You are married and have household taxable income of less than $250,000.
o On October 6, 2021, the Department of Education announced a temporary expansion of the Public Service Loan Forgiveness (PSLF) program Now, until October 31, 2022, borrowers may receive credit for past periods of repayment that would otherwise not qualify for PSLF. Under the new, temporary rules, any prior period of repayment will count towards the 120 payments needed for PSLF even if those payments were made on a FFEL or Perkins Loan. You still must have been employed by a qualifying employer. You must currently have a Direct Loan. Parent PLUS Loans aren't included in the expanded rules. Again, you must file the required application by October 31, 2022.
o There will be a new Income-Driven Repayment plan. The Department of Education is proposing a rule to reduce future monthly payments on undergraduate loans to 5% of discretionary income, down from the current 10%. Borrowers with undergraduate and graduate loans would pay a weighted average rate. Income-based repayment plans forgive loan balances after 20 or 25 years of repayment, depending on the plan. The proposed rule would fully cover unpaid monthly interest, so that borrowers’ loan balances would not grow, as long as they are making their required monthly payments. The rule would also raise the amount of income that is considered nondiscretionary income, which is protected from repayment. Borrowers with original loan balances of $12,000 or less would have loan balances forgiven after only 10 years of payments.