Federal Student Loans – What You Need to Know Now
UPDATE: On November 22, 2022, the Biden Administration extended the payment and interest pause on federal student loans to no later than June 30, 2023, pending the outcome of legal challenges to the Administration’s proposed federal student loan debt cancellation measures.
In early November, courts issued orders blocking the federal student debt relief program. As a result, the Department of Education is not currently accepting applications for its Student Debt Relief Plan. If you have already applied, the Department has said if it will hold your application.
For the latest details, visit the Federal Student Aid website at studentaid.gov or contact your federal student loan servicer.
What is happening with federal student loans?
As of August 24, 2022, measures include the following:
- The payment and interest pause on federal student loans will have a final extension through December 31, 2022, at which point payments and interest will resume.
- Federal student loan borrowers who earn less than $125,000 per year, or households earning less than $250,000, are eligible for debt cancellation up to $20,000 for Pell Grant recipients and up to $10,000 for non-Pell Grant recipients.
What steps do I need to take to receive the federal student loan cancellation?
According to studentaid.gov, nearly 8 million borrowers may be eligible to receive relief automatically because relevant income data is already available to the U.S. Department of Education.
- If the U.S. Department of Education doesn’t have your income data, the Administration will launch a simple application which will be available by early October.
- Borrowers are advised to apply before November 15th in order to receive relief before the payment pause expires on December 31, 2022.
- The Department of Education will continue to process applications as they are received, even after the pause expires on December 31, 2022.
How do I know if I received a Pell grant?
You can log in to your Federal Student Aid account and view your FSA Dashboard. You should see a breakdown of your federal student loans and grants.
Where can I get detailed information about these measures?
Visit https://studentaid.gov/debt-relief-announcement/ for more information.
Will my private student loans be canceled?
These measures are tied to federal student loans and do not impact any private student loans you may hold (including those you may have with your credit union). Many private student loan borrowers also have federal student loans. If you are in this situation, we encourage you to contact your federal student loan servicer to see if you qualify for some level of cancellation on your federal student loan debt.
What is the difference between federal and private student loans?
Federal student loans are made and funded directly by the federal government. Private student loans are made and funded by private lenders, such as credit unions, banks, and online lenders.
If I previously refinanced my federal student loans into a private student loan, will I still get $10,000 in cancellation?
The forgiveness is tied to existing federal student loans. If you opted to refinance your federal student loans into a private student loan in order to gain a lower rate or longer repayment term, that new refinance loan is not eligible for this cancellation.
If I have less than $10,000 in federal student loans, can I use the cancellation against my private student loans?
These measures are tied to federal student loans and do not impact any private student loans you may hold.
This post was updated on November 23, 2022. For the latest information about the proposed federal Student Loan Debt Relief Plan, visit https://studentaid.gov/.