August 25, 2022

What You Should Know About Biden’s Federal Student Loan Debt Relief

News

After four previous extensions under Biden’s administration, the student loan payment pause will be prolonged to December 31, 2022. This means that there is still no requirement to make monthly payments and no possibility of loans becoming delinquent or defaulted.

This doesn’t come as a huge surprise, given rising inflation and considering loan servicers were asked not to reach out to borrowers about upcoming payments in July. Biden also announced widespread forgiveness and changes to IDR plan repayments that have borrowers celebrating. Here are the details that uncover how much impact this really has.

Who is Eligible for Forgiveness and How Much?

Federal student loan borrowers are eligible, private loan borrowers are not. 

As anticipated, $10,000 forgiveness will go to individual federal loan borrowers who earn less than $125,000 per year, or households earning less than $250,000 per year. What came as a surprise, was the additional $10,000 in forgiveness for Pell Grant recipients, totally $20,000 of forgiveness. 

Graduate loans are eligible for forgiveness, as well as Parent Plus loans. Current students will qualify for loan forgiveness if their parents’ income is below the cap required to qualify. Federal Family Education Loan (FFEL) loans will qualify if managed by the Education Department. According to reports, The department has yet to determine whether borrowers with commercially held FFEL loans will be eligible for relief.

The relief total estimates is over $300 billion – a significant impact to the student debt crisis. Still, millions of borrowers are facing incredible sums of student debt, totalling $1.6 trillion and rising. 

Ensure You’re Set Up to Receive Your Forgiveness 

The U.S. Department of Education will soon launch an application process to collect income data from borrowers to verify eligibility and submit the forgiveness. To get alerted with a simple application process and other updates on the announcement, you can sign up for Chipper ‘Easy Apply’ here. 

Additional Relief for Borrowers on Income Driven Repayment (IDR) Plans.

Significant IDR plan changes were announced as well, slashing the time it takes to get forgiveness and lowering the repayment cap. 

Here’s the breakdown:

  • Undergraduate loan repayments are now capped at 5% of discretionary monthly income, rather than 10%.
  • Loan balances will be forgiven after 10 years of consecutive payments, down from 20 years.
  • Interest will no longer accrue as long as continuous IDR repayments are made.
  • Borrowers earning a minimum wage, or less than $15/hour, will have a $0 monthly payment once payments resume.

What About the PSLF Waiver?

The PSLF (Public Service Loan Forgiveness) waiver, a topic of major discussion as many borrowers find the process of applying for student loan forgiveness difficult and unattainable, is still set to be due on October 31st. 

What To Do Before Payments Resume?

The additional extension allows borrowers to reevaluate their current finances and discover potential repayment options that best suit their needs. Even though monthly payments aren’t required for public loan borrowers, the smartest thing a borrower can do (if their budgets allow) is to make payments now as there is 0% interest.

Use Chipper for Lower Payments

Chipper can help you find a student loan repayment plan that actually fits into your budget. You simply fill out your information and link your student loan account for us to generate your options in seconds. We help the average student loan borrower save over $300 a month off their student loan monthly payment. Lowering your monthly payment plan can game changing for your personal finance and can be done in minutes! Sign up for Chipper today to get on track with your student loans.

Use Chipper for The Best Path to Forgiveness

Finding your path to student loan forgiveness is easier than ever before. Chipper helps members find better Income-Driven Repayment (IDR) plans every day. Once enrolled in an eligible repayment plan, we can help you explore your forgiveness options and understand your path towards forgiveness. Sign up with Chipper today and get on track with your student loans.

Use Chipper for Round-Ups

Paying off your student loans doesn’t have to be a long and painful journey. Round-Ups are a way to directly pay off your loans with your everyday spending! By tracking your linked spending account(s), we will calculate the rounded up amount from each transaction in a week (IE spending $4.28 would add $0.72 to the weekly amount). We then initiate a payment towards your student loan for the weekly amount. Get chipping away on your student loans with Chipper today.

Use Chipper for Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness (PSLF) program was created to provide relief to borrowers aiding the public sector. Unfortunately, 30% of applicants are denied due to incorrect paperwork. We can help! Chipper was created to solve this issue by assisting borrowers in understanding their options as well as allowing forgiveness eligible users enroll into the best forgiveness program available. Sign up for Chipper today to see your student loan forgiveness options and get the forgiveness you deserve.

Use Chipper for Teacher Loan Forgiveness (TLF)

The Teacher Loan Forgiveness (TLF) program was created to enable teachers working in Title 1 schools to receive student loan forgiveness of up to $17,500 (depending on their teaching subject). Chipper has helped teachers from all over the country qualify for TLF program and can help you get the forgiveness you deserve today. Find out if you qualify for forgiveness in minutes with our employer search tool.

See How Much You Can Save with Round-Ups

Don't worry.
Be Chipper.
Get Started