President Biden's Student Loan Forgiveness
As an informed college student, you are probably aware of President Biden's proposal to eliminate up to $20,000 in student loan debt per borrower. This means possible thousands in loan forgiveness for many current or former students. When planning your economic future, lowered loan amounts can be critical to your transition into the job force after graduation.
By Dr. Gwendolyn Maria Parrish — November 4, 2022
What Is a Student Loan?
A student loan is all money granted to you via the federal government (except grants or scholarships) paid out by your education institution's financial aid office. Once you apply and qualify for a student loan, your financial need will determine your need based on your tuition and expenses each semester. Once your tuition is covered, you will be refunded any remaining funds. This can be a fantastic way to finance your education. However, these loans can quickly add up to a significant amount.
If you are like millions of college students nationwide, it is likely that at some point, your financial need exceeded your budget. As a result, you may have applied for and received federal financial aid, also known as a student loan.
To apply, you would have gone to FAFSA.gov to complete the appropriate forms. While completing your online FAFSA profile, you would have been required to fill out a mastery promissory note (MSN) and other borrower forms to ensure that you understood your responsibilities as a financial aid recipient. The promissory note makes you fully liable (responsible) for all monies awarded to you each semester which is set for repayment after graduation. To get more information about money matters, look at this article from the SAGE scholar newsroom.
What is student loan forgiveness?
After graduation, you may not have an immediate opportunity to get into the career you studied in school, which may mean earning a lower wage than you intended. When this happens, you may find that you cannot start repaying your loans immediately or even find that the borrowed amount is too high to repay. This is when loan forgiveness is helpful. It will reduce the amount of money you are expected to repay. Loan forgiveness means that you are NOT accountable for repaying the specified amount that has been forgiven.
As an informed college student, you are probably aware of President Biden's proposal to eliminate up to $20,000 in student loan debt per borrower. This means possible thousands in loan forgiveness for many current or former students. When planning your economic future, lowered loan amounts can be critical to your transition into the job force after graduation.
How do I qualify?
To see if you qualify, log into your student account at FAFSA.gov. All the information you need to know if you qualify or apply will be available there. Potential forgiveness is $10,000 and even up to $20,000 for those who also received a Pell Grant. The intent is to help millions of collegegoers, just like you, who have struggled financially during the recent economic hardships many Americans have faced. To qualify, you must meet the income requirements.
For example, if you are a single borrower, your gross yearly income can be up to $125,000, and $250,000 for a family. Be sure to check the status of your loans to see if you qualify as soon as possible. You have until October 31st, 2022, to apply. You may want to explore other loan forgiveness options in your FAFSA account. For example, if you work in public service, there are additional options to explore with your loan servicer. If your parent has applied for loans on your behalf (Parent Plus Loan), you can find information about how the loan forgiveness plan will also work for them.
What Happens Next
Once you have confirmed that you qualified and applied for the loan forgiveness program, you will work with your loan service provider to consolidate the remaining loans and make payment arrangements, such as income-driven repayment. President Biden is also proposing to allow loan borrowers to be required to pay no more than 5% of their total gross monthly income in payments so they can meet repayment requirements without defaulting. Defaulting happens when you do not make consistent payments as agreed upon in your master promissory note (MSN).
It is important to remember that you have the right to get all the financial assistance you may need while pursuing your degree; however, you also must repay all monies besides scholarships or Pell grants. All money borrowed must be repaid without defaulting (missing payments). Be sure to log into your FAFSA.gov account and apply before the October 31st deadline.
Dr. Gwendolyn Maria Parrish
Dr. Gwendolyn M. Parrish is a graduate of MSU, where she received a BA in Elementary Education and an MS in Educational Leadership. Maria has more than ten years of experience in the classroom and two years as a high school vice-principal. She is a graduate of Capella University, where she completed a Ph.D. program in Curriculum and Instruction and Administration. Maria has also been a writing consultant for Capella for the past three years and enjoy working with learners of all ages.
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