Biden Early Student Loan Forgiveness 2024: Do You Qualify?
Details about the recently announced Biden Administration student loan forgiveness
Have you been paying off your student loans for a decade or more? If so, you may be eligible for student loan forgiveness under the Biden Administration’s recently announced guidelines.
At the beginning of January 2024, the Biden Administration announced a new student loan repayment plan through which they will begin forgiving federal student loans for borrowers who initially took out $12,000 or less in loans and have been making (consistent) repayments on their debt for a decade or more.
Originally under the Saving on a Valuable Education Plan (SAVE), an income-based, income-driven repayment plan, loan forgiveness was implemented after 20 to 25 years of debt repayment. However, with the Biden administration’s new student loan repayment plan, loan forgiveness can happen as early as February 2024 for eligible borrowers.
In order to qualify, you need to be enrolled in SAVE. And according to The U.S. Department of Education, eligible participants already enrolled in SAVE, will get their loans forgiven with no action required on their part.
Here’s what you need to know if you’re eligible for this new loan forgiveness plan.
Biden Administration loan forgiveness qualifications
There are three main qualifications:
You must be enrolled in the SAVE plan.
The amount you borrowed must be $12,000 or less.
You have been making your student loan payments for the past ten years or more.
All three qualifications must apply to receive loan forgiveness.
If you don’t qualify for loan forgiveness, there are still other loan repayment options available to you.
Other loan forgiveness plans
It can be challenging to understand how student loans and repayment plans work. However, with a bit of research and knowledge, you’ll see there are other repayment options available.
Keep in mind, that you’ll want to continue making your payments until you confirm your loans have been forgiven. It is best not to make any assumptions until you know for sure.
Here are two of the most common ones:
1. Public Service Loan Forgiveness (PSLF)
The Public Service Loan Forgiveness (PSLF) program can eliminate the outstanding balance on your student loans once you’ve completed 120 monthly payments and work full-time for an eligible employer.
If you are employed by a non-profit organization or a government agency, you may be eligible. However, before assuming forgiveness, check with your employer to see if they are a verified participant in the program.
2. Teacher Loan Forgiveness
If you’ve taught for five consecutive years at a qualified school, you can apply to have $17,500 of your federal student loans forgiven.
The Teacher Loan Forgiveness program was created to recognize educators working full-time in low-income elementary schools, secondary schools, or educational services agencies. Be sure to review the specific qualification guidelines.
Loan repayment plans
While not everyone is eligible for forgiveness programs, repayment plans can help you make consistent payments regardless of your financial situation.
Here’s a short breakdown of some of the plans.
Note: We’ve added specific links to each of these plans from the studentaid.gov website. Each plan has its own unique pros and cons detailed on the website so please review carefully.
1. Standard Repayment Plan
The Standard Repayment Plan can help you pay off your loans within ten years. This plan involves paying a monthly fixed amount until your loan is completely paid off.
If you have a steady job and a reliable income, this can be one of the best options to pay off your loans quickly.
2. Direct Consolidation Loans
With a Direct Consolidation Loan, you can combine two or more federal loans into one. By doing so, the new loan amount will have a fixed interest rate, which is determined by the average rate of the consolidated loans.
With this new plan, your repayment period extends to 30 years.
3. Graduated Repayment Plan
Finding a job after graduation isn’t always easy, and often, salaries are low in the beginning. The Graduated Repayment Plan takes this under consideration by allowing you to make smaller payment amounts for the first two years. Then, your monthly payment will slowly rise every two years until your loan is completely paid off in about ten years.
4. Extended Repayment Plan
If your income is fluctuating or if you find it challenging to maintain a monthly payment, then you can use the Extended Repayment Plan.
This repayment alternative permits you to extend your loan commitment, extending the repayment period from the standard ten years to 25 years.
It’s important to note that although this plan offers lower monthly payments, this approach may result in higher overall interest costs over the duration of the loan.
5. Pay As You Earn Repayment Plan (PAYE)
With the Pay As You Earn (PAYE) Plan, you’ll pay 10% of what you earn with the agreement that your payment amount won’t surpass the amount you pay under the standard repayment plan.
A convenient aspect of this plan is that your loan is eligible for forgiveness if you don’t pay off your debt in 20 years. However, if this occurs, you may have to pay income taxes on the forgiven amount.
6. Income-Based Repayment Plan (IBR)
The Income-Based Repayment Plan (IBR) considers the burden student loans can place on your budget and livelihood. With the IBR plan, your payments are capped at 10% of your discretionary income.
By having payments adjusted to your income level, it can be easier to make regular payments.
7. Income-Contingent Repayment Plan (ICR)
The Income-Contingent Repayment Plan (ICR) gives you two options for repayment, and you’d pay the lesser of the two.
Option one is to make a monthly payment of 20% of your discretionary income. The second option is to pay the same amount you’d pay on a 12-year fixed repayment plan.
Student loans can be a helpful way to pay for college and other expenses. However, you don’t want to spend more time than necessary repaying the money you borrowed.
Whether you’re thinking about taking out student loans or are currently repaying loans, always do your research and consider your options.
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