The Biden administration has announced its regulations finalized for updated changes to the student loan structure. These new amendments will limit accrued interest and spread out loan forgiveness relief. According to NPR, the updated factors will have the potential to reduce debt for more than 40 million people and completely relieve debt for approximately 20 million students.
Loyola students will no doubt be impacted by this relief plan and, like the nation as a whole, are divided over its effectiveness.
Matt Butler ’23 said: ‘I’m not sure that’s fair, a lot of students take out private loans that won’t be forgiven. Also, the cut points seem to be completely arbitrary.
However, another Loyola student lent his support.
Rebecca Stone ’23 said: “[Federal Student Loan Forgiveness] will help reduce the pressure of some financial issues, as these loans always earn interest. »
The qualification process is quite simple. The US Department of Education has established a dedicated website for the purpose of applying for student loan relief. The only qualification is whether you, as an individual, earned less than $125,000 or less than $250,000 as a couple in 2020 or 2021.
The website only requires your full name, social security number, date of birth, and a current phone number and email address. There are no foreign account forms that need to be created. There is also a checkbox that certifies that all of the above information is true under penalty of perjury.
After submitting your application, you should receive an email from the Department of Education confirming your submission. The approval process is somewhat unclear. The only information that has been released so far is that the Department of Education will cross-check your application with their loan and income information. If there are any discrepancies from their records, you may need to submit additional documentation.
Currently, the Pausing Federal Student Loan Payments is in place. This pause has currently suspended loan repayments, guaranteed a 0% interest rate, and halted collection of defaulted student loans. However, this system is expected to end in the new year and students will once again be burdened with their loans.
US Secretary of Education Miguel Cardona said in a Press release regarding the recently expanded debt relief programs,
“These transformational changes will shield students who have been deceived by their colleges from the bureaucratic nightmares of the past and ensure that all of our targeted debt relief programs deliver on the promises made by Congress in the Higher Education Act. We also protect borrowers from higher costs by limiting the practice of deducting unpaid student loan interest from their principal balance.
In a speech at Delaware State UniversityPresident Biden has made it clear that this student loan forgiveness will not eliminate all student debt.
“By relieving student debt, we’re also taking back student loan payments that you’re going to have to start paying…So in January, people whose debt isn’t fully forgiven, you’re going to have to start paying the loans canceled students. That means billions of dollars a year are also going to start coming back to the treasury,” Biden said.
The president stressed that only lower and middle class debtors will be relieved of their debt. It plans to collect the full amount for others who received student loans but earn more than the $125,000 or $250,000 threshold.
One of the most confusing aspects is whether students who have paid off their debt, but are now eligible for debt relief, will get their money back. The answer to this is complex. If your outstanding debt is less than the relief amount of $10,000 or $20,000, the ministry will handle the entire process of returning that money. It will automatically be redeposited to your account. Otherwise, the status of your money will be included in your debt.
Image courtesy of the White House via Wikimedia Commons.