- The temporary changes which allow borrowers to receive credit for past periods of repayment that would otherwise not qualify for PSLF will NOT be extended.
- Borrowers with verified annual income of less than $125,000 (for individuals) OR less than $250,000 for married couples or heads of households who received a Pell Grant in college will be eligible for up to $20,000 in debt cancellation.
- Borrowers who met the above income standards but did not receive a Pell Grant will be eligible for up to $10,000 in debt cancellation.
- Case #1 Qualifying Individual with verified income: Nora has $27,500 and received $1,095 in Pell Grants during college. Nora makes $60,000 annually and is currently in an Income Driven Repayment Plan. Because Nora had a Pell Grant AND her income has been verified with the Department of Education, she is eligible for $20,000 of debt cancellation.
- Alternatively, if Nora had $27,500 in student loan debt, did not receive a Pell Grant in college, makes $60,000 annually, and is currently in an Income Driven Repayment Plan she would only be eligible for up to $10,000 in debt cancellation.
- Case #2 Qualifying Individual, with unverified income: Nora has $27,500 and received $1,095 in Pell Grants during college. Nora makes $60,000 annually and is currently on a Standard Repayment Plan. Although Nora received a Pell Grant, her income has not been verified with the Department of Education. She will first need to provide her income data in order to be eligible for $20,000 of debt cancellation. The income data application will be available before the pause on federal student loan repayments ends on December 31st.
- Case #3 Qualifying Married/Head of Household: Sarah has $50,000 in student loan debt, received a Pell Grant in college, and makes $200,000 annually with her spouse. Sarah is eligible for? $20,000 of debt cancellation since she falls below the income threshold for borrowers who are Married and file taxes jointly and received a Pell Grant in college.
- Alternatively, if Sarah did not receive a Pell Grant in college, and makes $200,000 annually with her spouse, she would only be eligible for $10,000 of debt cancellation.
- The propose plan will substantially reduce future monthly payments for lower- and middle-income borrowers as well as expanding forgiveness options. Full details will be made available in the next 30 days.
- The Pell Grant is a form of need-based federal financial aid that typically does not have to be repaid, which makes it highly desirable. It is awarded by the U.S. Department of Education to help eligible low-income students pay for college costs, including tuition, fees, room and board, and other educational expenses.
How do I know if I received a Pell Grant in college?
If I believe I’m eligible, how will I receive my debt cancellation?
- This should be automatic for those on an Income Driven Repayment Plan who have certified their income during the pandemic. If you’re unsure if you’re included then an application will be made available sometime between now and December 31st, 2022. You can sign up? here for updates on this.?
Where can I learn more about this?
- You can read more about this announcement on the Department of Education site here, the FSA Website here, and, if interested, the Legal Memorandum for department’s authority for discharge here.
