By Rick Cox
The Department of Education has announced that the payment pause for student loans has been extended for the final time through December 31, 2022. Additionally, the department announced targeted debt relief for some borrowers. Borrowers with annual income during the pandemic of less than $125,000 ($250,000 for married couples) and who received a Pell Grant will be eligible for up to $20,000 in debt cancellation. If the borrower did not receive a Pell Grant, the borrower is eligible for up to $10,000 in debt cancellation.
The department hasn't posted a lot of details yet, but our understanding is that the debt relief will:
· Include PLUS Loans (both graduate PLUS and parent PLUS)
· Be based on parents’ income for borrowers who were dependent students in 2021-2022.
· Only apply to loans that are fully disbursed by June 30,2022.
· Be based on the annual income for 2020 or 2021. If either year qualifies, the borrower qualifies for the relief.
For some borrowers, the process will be automatic because relevant income data is already available to the Department of Education. If the department doesn’t have income information for a borrower, they will need to submit an application. However, the application process is not yet available. Borrowers can sign up through the department's subscription page to receive a notification when the process becomes available. Global will provide more details as soon as more information is published by the department.
To access the announcement, please click here.
Rick Cox is Global’s Executive Director of Regulatory Affairs and Compliance