Blog . Department of Education announces changes to Federal Loan Programs
Department of Education announces changes to Federal Loan Programs
08/24/22 | Posted by Marlon Jones | Posted in Financial Aid
UPDATE: The one-time federal student loan cancellation program is currently blocked by federal court orders. Applications are not being accepted at this time, but the Department of Education is seeking to overturn the orders.
If you have applied already, your application will be held in their system. Check this page for updates.
Related, the Biden administration has extended the PAUSE on student loan payments through June 30, 2022, to allow time for the Department of Education to work through the Court issues.
From August 24, 2022:
The U.S. Department of Education announced today (August 24, 2022) several changes that apply to Federal Loan borrowers.
An extension to the pause on student loan repayment, interest, and collections of Federal Student Loans through December 31, 2022. This "pause" was started in 2021 to assist borrowers during the COVID pandemic. This extension of the pause is expected to be the last pause to this program.
The Department will also provided targeted student debt cancellation to borrowers with loans held by the Department of Education. Borrowers with annual income during the pandemic of under $125,000 (for individuals) or under $250,000 (for married couples or heads of households) who received a Pell Grant in college will be eligible for up to $10,000 in relief. Additional details will be announced later this year.
Lastly, the Department is proposing a rule to create a new income-driven repayment plan for low- and middle-income borrowers. The proposed rule would protect more income from loan repayment, from 10% to 5% of discretionary income. Borrowers with undergraduate and graduate loans would pay a weighted average amount. The rule would also forgive loan balances after 10 years of repyament (instead of the current 20 years under many income-drive repayment plans), for borrowers with original loan balances of $12,000 or less.
Additional information is available online.