Federal Loan Repayment Plans
There are a number of different federal loan repayment plans available to Direct and FFEL loan borrowers. Your loan repayment options depend on your loan type, balance, status, and time in repayment. To learn more about your loans, visit the National Student Loan Data System .
Tips:
- There are no prepayment penalties for federal student loans.
- You can generally change your federal student loan repayment plan at any time. However, note that not all plans are available to all borrowers.
If you do not choose a repayment plan, your loan is automatically placed into the Standard Plan, which provides a ten-year repayment term and requires payments of at least $50 per month. However, a number of other repayment plans are available if you cannot afford the monthly payment under the Standard Plan. These alternative plans offer their own benefits and drawbacks as compared with the Standard Plan. However, they can be a good choice for someone who cannot afford the monthly payments required under the Standard Plan.
Biden Cancels Student Loans Through Executive Order
Sen. Elizabeth Warren , who led the charge to make student loan forgiveness tax-free for student loan borrowers, says this now removes a hurdle for President Joe Biden to cancel student loans through executive order. Others have said making student loan forgiveness tax-free now makes it more likely that Biden will cancel student loans. While this tax-free development may be a welcome financial benefit for student loan borrowers, its unrelated to Biden cancelling student loan debt. Biden wants to $10,000 of student loan cancellation, but wants Congress the legislative branch with constitutional authority to enact student loan forgiveness. When Biden said he was unlikely to cancel student loans, it wasnt because of the potential tax burden for student loan borrowers. Biden supports tax-free student loan forgiveness, but his point has always been that he doesnt believe he has legal authority to cancel student loans unilaterally without further congressional authorization. Biden said he would consider student loan cancellation through executive order and will ask the U.S. Attorney General to conduct a legal review regarding Bidens legal authority. However, there is no current indication that following passage of the stimulus bill that Bidens position has changed or that he is any more likely to proceed with wide-scale student loan forgiveness through executive order.
How The Tax Break Could Lead To Further Relief
While the provision currently expires on Dec. 31, 2025, some advocates see it as a first step toward widespread forgiveness or additional tax changes.
âThe student loan tax relief legislation paves the way for President Biden to cancel at least $50,000 in federal student loan debt,â Sens. Menendez and Warren said in a press release, which pointed to a resolution they supported, along with other Democrats, in February. That resolution encouraged President Biden to cancel up to $50,000 in federal student loans per borrower by executive order. If President Biden does so in the next five years, borrowers would not pay income tax on that money.
Another possibility, now that the bill has been signed into law, is that the tax break could be extended beyond 2026 if it goes through the legislative process again. That would open up the possibility that more IDR borrowers could benefit. For advocates, itâs a step in the right direction.
âCongress has paved the way to ensure that student loan borrowers are able to access loan relief without fear of an unfair tax penalty,â Persis Yu, director of the National Consumer Law Centerâs Borrower Assistance Project, said in a statement.
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Fighting Inflation Could Increase Unemployment To 6%
Analysts at Deutsche Bank on Wall Street noted that the fight against inflation could lead to a rise in U.S. unemployment, higher than the Federal Reserve’s forecast.
The Fed’s figure is for a 4.4% increase by 2023, but according to recent financial analysis this could rise to 6%.
Last month, the unemployment rate was 3.5%, the lowest since February 2020. By March of that year, the Covid-19 pandemic began to hit the economy and caused widespread job losses.
The nation’s labor force is 164 million, which means that 4 million jobs could be lost next year. Economists expect the U.S. to enter a recession by the end of 2023.
Other Recent Student Loan Forgiveness Developments
The U.S. Department of Education and the Justice Department are reviewing whether the President has the legal authority to cancel up to $50,000 in federal student loan debt through executive action. There is no timetable on when these reports will be issued. There may be delays because Congress has not yet confirmed key policy advisors in both departments.
The White Houses Domestic Policy Council will consider how student loan forgiveness should be targeted, regardless of whether it is implemented through executive action or legislation.
Borrowers should beware of student loan scams that promise debt forgiveness, in exchange for a fee. When student loan forgiveness is implemented, it will most likely be automatic and free. The U.S. Department of Education will publish an update on the StudentAid.gov web site.
The U.S. Department of Education has recently taken a few steps toward providing student debt relief for which they have clear legal authority:
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‘start Here’ Takes A Look At Changes To Student Loan Forgiveness Plan
The Department of Education quietly updated its qualifications for the program.
In August, President Biden announced his decision to cancel up to $10,000 in student loan debt for individuals making less than $125,000 a year
On Thursday, the Department of Education scaled back President Joe Biden’s federal student loan cancellation program to protect against legal challenges by six states, with new guidelines that excluded at least hundreds of thousands of borrowers initially told they qualified for the program.
The move excludes people who took out federal loans that, while they were guaranteed by the government, were technically handled by private banks.
ABC News’ Senior National Policy Reporter Anne Flaherty spoke with “Start Here” Friday about the surprise move, what prompted it and how it will affect Americans with student loan debt.
START HERE: Anne, is it possible that the government pulls like a take-backsy? What is going on here?
The other thing is he’s relying on a lot of what was enacted after 9/11. This was a law that said the president can reduce or erase student loan debt during a national emergency. But he’s also the same president who went on national television recently and said the pandemic is over. That’s the Republican argument on this.
START HERE: At this moment Anne, who is about to get their loans forgiven and who might not?
START HERE: Private businesses essentially.
Student Loans And Bankruptcy
You may have heard that you cannot discharge your student loans, even in bankruptcy. This is NOT correct. You can discharge your federal and private student loans in bankruptcy if you are able to demonstrate in court that paying your loans would cause you and your dependents undue hardship. The court will consider your financial circumstances in determining whether paying your student loans would cause an undue hardship. Filing for bankruptcy is a very personal decision and can have a significant, long-term impact on your finances. If you are thinking seriously about filing, you should consult a lawyer.
To learn more about discharging student loans in bankruptcy, visit StudentAid.gov.
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Biden Faces A New Fight Over Debt
Its official. President Biden announced yesterday that the federal government would cancel billions in student debt. The move, which promises to offer widespread relief for tens of millions of Americans, has ignited a fiscal debate and raised the possibility of opening a deep political rift that could rival those created by last years stimulus check scuffle and the 2008 bank bailouts.
The program, in a nutshell: It would forgive up to $20,000 per borrower, so long as the person earned less than $125,000 a year, or is in a household that earned less than $250,000. Current students are eligible, though if they were claimed as dependents, that would cap their relief.
Because Biden used executive action instead of going through Congress, legal challenges are expected.
Praise came from some. Liberal Democrats and labor advocates, who had pressed Biden to fulfill one of his campaign promises, lauded the announcement. But some Biden allies said the president didnt go far enough. They wanted $50,000 in relief per borrower.
Even some in the business community offered some support. The C.E.O. of the National Housing Conference, David Dworkin, called the initiative one of the most consequential administrative actions for housing in a generation, and said it could bring millions of new home buyers into the market.
Popular Arguments For Student Debt Cancellation
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Student debt has caused borrowers to delay their lives. From starting businesses and buying homes to getting married and having children, student debt is preventing borrowers from making significant financial decisions, proponents of debt cancellation say.
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Not all borrowers have degrees that boost earnings. Those with debt and no degree are four times as likely to default compared to those with a degree, according to Brookings. About 41.8% of those who entered college in 2011-12 took on student loans, National Center for Education Statistics data shows. But six years later, only 59% had completed their bachelors degree. Borrowers without degrees dont benefit from the increase in lifetime earnings that tend to correlate with college completion.
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Student debt cancellation could reduce the racial wealth gap. Proponents point to data that shows a lack of generational wealth drives many Black and Hispanic families to lean more heavily on student loans to afford college. The inequities continue after graduation: Black and Hispanic graduates typically earn less than other graduates and are thus more likely to default on their loans.
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Tax Refund Seizure Collections And Wage Garnishment Is On Hold
The COVID-19 relief bill pauses collections efforts on federal student loans. It also stops collections, wage garnishment, and seizure of tax refunds retroactive to March 13, 2020.
Importantly, this includes defaulted FFEL borrowers who didnt have access to stimulus package student loan benefits until March 2021.
This is big news for borrowers struggling the most. If you had your wages or tax refund seized on or after March 13, 2020, you need to make sure your address is current in the Department of Education system. Call 800-621-3115 to make sure they mail your check to the right address.
Keep Track Of These Dates
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Unpaid interest will not capitalize during the payment pause and through March 1, 2023. If your grace period ends between March 13, 2020 and March 1, 2023, your interest will not be added to your balance immediately.
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Earliest month borrowers would need to recertify for income-driven repayment. If your account still shows your recertification date set before March 2023, it will be pushed out by one year.
June 30, 2023:Deadline for the 2022-23 FAFSA.
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Will Your Student Loans Get Cancelled
Will your student loans get cancelled? Without internal consensus on the amount and qualifications for student loan cancellation, student loan forgiveness wont become reality in the near-term. Biden proposed to cancel student loans three ways. If Democrats dont align on outright student loan cancellation, they could universally support others ways to cancel student loan debt. However, if recent tweets are any indication, its become increasingly clear that student loan cancellation isnt a foregone conclusion. Therefore, dont count on automatic student loan cancellation. Instead, get a student loans game plan. Start with these three options, all of which have no fees:
How Much Is The Biden Student Loan Forgiveness
The amount of debt forgiven in the student loan forgiveness program is $10,000, unless you received a Pell Grant during your time in college. If you did, you could have $20,000 in loan forgiveness, provided your income during the pandemic was less than $125,000 or, if you were married and filing jointly, less than $250,000.
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Student Loan Forgiveness Was Reduced Significantly In The Heroes Act
Student loan forgiveness may be top of mind for many student loan borrowers. However, dont get your hopes up in the near-term. The HEROES Act initially proposed $10,000 of student loan forgiveness for your federal student loans and $10,000 of private student loan forgiveness. This provision was already less than earlier House Democrats proposal that called for $30,000 of student loan forgiveness. Now, the student loan forgiveness plan is even less than a Senate student loan forgiveness plan to forgive at least $10,000 of federal student loans for all borrowers. Why? House Democrats amended the HEROES Act and weakened the final provision for student loan forgiveness. Rather than every borrower receiving student loan forgiveness, the legislation was narrowed to only those borrowers who are facing significant financial struggles. As a result, if the HEROES Act becomes law, millions of student loan borrowers likely would not qualify for, or receive, student loan forgiveness. Even with the final proposal for student loan forgiveness, the provision is less likely to pass the Senate.
American Finances Updates: Stimulus Checks Tax Rebates Student Loans
All the latest finance updates from the US
Hello again everybody and welcome to our live blog with all of the latest financial news coming out of the United States this Wednesday, August 31.
Our live blog will bring you the latest updates on a variety of financial issues like Gas Prices, Federal Gas Tax Holiday and Student Loan updates among other topics. In addition, there will be various money-saving tips and benefits programs being rolled out across the country.
So, right below and with the most recent updates nearest the top, we’ll have information on how to get cheaper gas or even free gas in certain parts of the country, as well as details on the most important benefits programs.
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Student Loan Forgiveness Doesnt Give Much Cash For People To Spend In The Economy
The authors estimate that if the federal government spends approximately $1.6 trillion to cancel student loans, the net effect would be only $90 billion of available cash to spend in 2021 and less than $450 billion over the next five years. Even if a borrower receives $10,000 of student loan forgiveness now, they dont receive $10,000 of cash. Rather, that borrower would not have to make principal or interest payments, which could free up several hundred of dollars of cash each month. This is especially true for borrowers who pay off student loans over 10-30 years and have relatively lower monthly payments. The authors also note that this cash impact may be overstated due to income tax. For example, if a student loan borrower receives student loan forgiveness under an income-driven repayment plan, for example, the amount of student loans forgiven is taxable. If Congress or the president cancels student loans and does not somehow waive the tax liability, then the authors note the stimulus effect could be closer to zero.
Popular Arguments Against Student Debt Cancellation
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Student debt cancellation is inherently unfair. Critics argue those who didnt go to college or those who already paid off their student loans would not benefit from student debt cancellation. Critics say cancellation would benefit only the 13% of the population who attend college, and argue cancellation is unnecessary because those with college educations tend to earn more.
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One-time cancellation doesnt solve tomorrows student debt problem. If all student debt were eliminated, overall debt would return to the current level by 2035, according to July 2021 estimates by the Committee for a Responsible Federal Budget, a right-center public policy organization. If $10,000 in debt per borrower were eliminated, overall debt would rise to current levels by 2025.
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Headlines: Tuesday 1 November 2022
– Dow Jones slipped Monday but had best results since 1976 up shy of 14%, boosted by record oil profits
– Inflation in Europe hits record high of 10.7%
– The economy and healthcare costs are a top concern for midterm voters.
– US registers 2.6% GDP growth in Q3
– NYC salary transparency law to take effect 1 November
– Mortgage rates fall below 7% after reaching 20-year high
– California confirms the next round of inflation relief checks was sent out on Friday
– White House moves to create new rules to protect consumers from “junk fees”
– Final deadline to claim stimulus checks approaching
– The student debt forgivenessapplication deadline, when is it?
An essential part of the American dream is owning a home, but housing is one of the largest expenses in the US with down payments varying from city to city.
Larry Downing / Reuters
Mortgage rates today, October 27 | Fixed and adjustable-rate | Annual Percentage Rate
An essential part of the American dream is owning a home, but housing is one of the largest expenses in the US with down payments varying from city to city.
More jobs available than unemployed to fill them
The US Bureau of Labor Statistics will release unemployment information for October later this week on 4 November The most recent report showed the unemployment rate edging down slightly to 3.5% as well as the number of people unemployed shrinking to around 5.8 million.
Free File tool closes in November
Unemployment dropped even lower in 49 states in September
% Of Americans Are Living Paycheck To Paycheck
A recent report notes that thanks to current inflation, the number of Americans living day-to-day is near an all-time high, with nearly half of those earning more than $100,000 struggling to make ends meet.
During September, 63% of citizens were living day-to-day, according to LendingClub’s report, falling just one percentage point short of the all-time high reached in March. These numbers are higher than last year’s figure, which hovered around 57%.
“Consumers are not able to keep up with the pace at which inflation is rising,” said Anuj Nayar, head of financial health at LendingClub.
“Having a job is no longer enough for the average American,” Nayar said. “Wage growth has been inadequate, leaving more consumers than ever with little or nothing left over after managing monthly expenses.”
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