STUDENT LOAN DEBT OVERTURNED BY US SUPREME COURT
From studentaid.gov, "The Supreme Court issued a decision blocking us from moving forward with our one-time student debt relief plan." For more information, go to One-Time Federal Student Loan Debt Relief.
PUBLIC SERVICE LOAN FORGIVENESS UPDATE
From studentaid.gov, "While the U.S. Department of Education (ED) is working to process PSLF forms and update accounts with credit under the limited PSLF waiver, we are also working to apply changes previously announced in April 2022, as part of the one-time account adjustment. These changes mean that borrowers with federally managed loans may still see an increase in their payment counts toward income-driven repayment and PSLF forgiveness."
REPAYMENT OF STUDENT LOANS
From studentaid.gov, "Your first payment will be due in October 2023. You’ll get your bill in September or October—at least 21 days before your payment due date—with your payment amount and due date." For more information, go to One-Time Federal Student Loan Debt Relief.
DEBT RELIEF, PUBLIC SERVICE LOAN FORGIVENESS, FRESH START & REPAYMENT
For assistance with your student loans, contact IonTuitionTM by logging into the IonTuitionTM portal or calling 855-693-4932. SPC partners with IonTuitionTM to assist our student loan borrowers with successful repayment.
More details from the Department of Education
For detailed information, see Coronavirus and Forbearance Info for Students, Borrowers, and Parents.
Watch out for scammers!
The US Department of Education (ED) will never charge a fee for any of these services. ED will contact student loan borrowers by email or text, NOT by phone. Emails will be sent from a @studentaid.gov address. Texts will only be sent if you sign up.
Per the Federal Trade Commission, "you don’t need to do anything or pay anybody to sign up for the new program — or the pause. Nobody can get you in early, help you jump the line, or guarantee eligibility. And anybody who says they can — or tries to charge you — is (1) a liar, and (2) a scammer." See more at FTC's Did you hear about the student loan annoucements? Scammers did too.
See more information on scams.
On Aug. 24, 2022, Federal Student Aid and the Biden-Harris Administration have announced one-time loan forgiveness plans of up to $20,000 for prior Pell-Grant recipients and up to $10,000 for all other loan borrowers. To be eligible borrower's annual income must be below $125,000 (individuals) and $250,000 (married couples/head of households).
Loans must have been first disbursed prior to June 30, 2022.
Loans borrowed for 2022-23 (fall 2022, spring 2023 and summer 2023) will NOT be part of the student loan debt relief plan.
Sign up on the US Department of Education subscription page to receive notifications.
Visit Student Debt Relief Plan for the most up-to-date information.
Here are some helpful Q&A's:
Who qualifies for loan cancellation?
Individuals who are single and earn under $125,000 will qualify for the $10,000 in debt cancellation. If you're married and file taxes jointly or are a head of household, you qualify if your income is under $250,000. Eligibility is based on your adjusted gross income. Income figures from either 2020 or 2021 can render you eligible, but 2022 income will not. If you received a Pell Grant and meet these income requirements, you could qualify for an extra $10,000 in cancellation. Currently enrolled students are eligible.
Which loans qualify?
Only federal student loan debt disbursed prior to June 30, 2022 is eligible (subsidized, unsubsidized, consolidation, Grad and PLUS loans). This includes Federal Family Education Loan Program (FFELP) loans if they are held by the Department of Education. Defaulted loans also qualify.
Do defaulted loans qualify?
Yes. All defaulted borrowers who benefited from the payment freeze are eligible for cancellation.
Which loans do not qualify?
Private loans and commercially-held FFELP loans are not eligible.
I didn't finish my degree. Does that disqualify me?
How do I apply?
Go to Debt Relief Application.
What's the next thing I need to do?
Make sure your loan servicer knows how to find you so you can receive further guidance and instructions. Check that your address, email address and phone numbers are accurate.
How do I find out who my loan servicer is?
Consult the Department of Education's Who is my Student Loan Servicer?
How do I find out my student loan balance or if I received a Pell Grant?
You can view your loan balance and check your Pell Grant status by logging into your Federal Student Aid account, which contains all relevant information about federal student loans, including who your servicers are and how much you owe. Log in using your FSA ID.
Do I need to apply for student loan debt relief or does it happen automatically?
It depends. If you’re already enrolled in some kind of income-driven repayment plan and have submitted your most recent tax return to certify that income, your servicer and the Education Department know how much you earn and you should not need to do anything else. Still, keep an eye out for guidance from your servicer.
The Department of Education is creating an application for other borrowers.
How can I be sure that the cancellation has really happened?
Watch for messages from your loan servicer and be wary. Given how many millions of people are involved and that billions of dollars are at stake, there are bound to be hiccups. If you get a message that you have a zero balance or that your balance has fallen by $10,000 or $20,000, take a screen shot and print it out in case it somehow changes later.
If your debt does go to zero, keep an eye on your credit report in the months afterward to make sure that your loan servicer is reporting that fact correctly. For instance, there should not be any notices of late payments that post after your balance shows as zero.
Will I have to pay federal taxes on the cancelled debt?
My debt exceeds the amount I am eligible to have canceled and my loan payments have been paused since March 2020. When will payments start on my remaining balance?
Repayment is scheduled to begin in January 2023. You should receive a billing notice at least three weeks before your first payment is due, but you can contact your loan servicer before then (online is more efficient) for specifics on what you owe and when payment is due.
I have more than $10,000 in debt. When and how will my monthly payment amount be adjusted?
Payments will be recalculated, but student loan servicers have not yet received guidance on when or how payments will be recalculated.
What if I want to keep paying the same amount and have it applied to the principal?
Send in the extra money with your on-time payment each month. The extra funds will be applied first toward any accrued interest and then toward your principal. Log in to your account to make sure this occured.
What if I still can't afford to pay my loans? What are my options?
There are several repayment options to consider, each with different eligibility rules, conditions and details. In many cases, you may want to opt for an income driven repayment plan, where the payment amount is tied to your income and may be as low as $0.
If I made payments during the pandemic, can I get those refunded?
Yes, borrowers who made payments on their federal student loans during the pandemic-related payment pause can request a refund and potentially get more of their debt cancelled.
Will debt relief become a regular thing?
No. Repeated instances of cancellation are unlikely.
If you are employed by a U.S. federal, state, local or tribal government or not-for-profit organization, you might be eligible for the Public Service Loan Forgiveness Program.
Visit Public Service Loan Forgiveness for the most up-to-date information.
Here are some helpful Q&A's:
How does the program work?
The PSLF Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer. You must have worked for a qualifying employer during the calendar month you were also in repayment on your loan.
What loans are eligible to be forgiven with PSLF?
Direct Loans or Direct Consolidation Loans (other federal student loans can be consolidated into a Direct Loan)
Do I have to be enrolled in a specific repayment plan?
You must be enrolled in one of four Income Driven Repayment plans - Income-Contingent (ICR), Income-Based (IBR), Pay As You Earn (PAYE) or Revised Pay As You Earn (REPAYE).
Do you have any recommendations regarding repayment?
The best way to ensure that you are making on-time, complete payments is to sign up for automatic debit with your loan servicer.
How do I know if my employer qualifies?
Use the Employer Search Tool to determine if your employer qualifies.
How do I apply?
Use the PSLF Help Tool to start your application. You will need to log in using your FSA ID. Your employer must certify your employment. See How to Submit the PSLF Form for details on acceptable signature formats and where to send completed forms.
How often should I complete the process?
Plan to have your employment certified every year.
How does Debt Relief overlap with PSLF?
Loan cancellation should happen independently of any process that you’re already going through to get partial or complete forgiveness through PSLF.
Under the Fresh Start initiative, borrowers will temporarily regain several student aid and credit reporting benefits, including stopping of wage garnishment and withholding tax refunds. You’ll also get the opportunity to get out of default and keep those benefits for the long term.
You can now apply for federal student aid to help you complete your credential or degree and increase your long-term repayment success OR if you are not ready to attend school, you may contact the Department of Education to make payment arrangements.
Loans in a Title IV loan or grant overpayment status are not eligible.
The Department of Education will begin notifying borrowers about their eligibility for Fresh Start on Oct. 1, 2022.
Visit Fresh Start for the most up-to-date information.
Here are some helpful Q&A's:
How do I apply?
Borrowers can apply for federal student grants, loans, or work-study funds by completing the Free Application for Federal Student Aid (FAFSA).
Which loans are eligible for Fresh Start?
- Defaulted William D. Ford Federal Direct Loan (Direct Loan) Program loans
- Defaulted Federal Family Education Loan (FFEL) Program loans (both ED-held and commercial-held)
- Defaulted ED-held Perkins Loans that are serviced by the Department's Debt Management and Collections System (DMCS)
Which loans are not eligible for Fresh Start?
See the Fresh Start announcement for a list of ineligible loans.
How long do I have to apply?
Fresh Start will continue through one year after the COVID-19 payment pause ends.
How do I become eligible?
You may either attend school, receive financial aid by Dec. 31, 2023 and sign a statement acknowledging that the loan(s) will be transferred to a non-default servicer.
What do I have to do next?
You must contact your loan holder to use Fresh Start to get out of default. Go to myeddebt.ed.gov or call 800-621-3115. For additional contact information and more details, go to Fresh Start Announcement.
What if I become delinquent again?
For any loan that becomes delinquent after Fresh Start is implemented, the 240 day clock begins again for that loan before the loan goes into default again.
From studentaid.gov, "The student loan payment pause is extended until the U.S. Department of Education is permitted to implement the debt relief program or the litigation is resolved. Payments will restart 60 days later. If the debt relief program has not been implemented and the litigation has not been resolved by June 30, 2023 — payments will resume 60 days after that. We will notify borrowers before payments restart."
Here are some helpful Q&A's:
What can I do right now to prepare for repayment?
1. Log in to studentaid.gov using your FSA ID and do the following:
a. Find your servicer - you may have multiple servicers, your servicer may have changed or your servicer may have changed names.
b. Review the following: outstanding balance, accrued interest, due date and monthly payment amount. You can manually add other federal loans if any are missing.
c. Review your Repayment Plan - use the Loan Simulator Tool to guide you through the options and help you decide which plan best fits your goals, i.e., a lower/lowest payment plan vs. shortest repayment time frame.
d. Choose your Repayment Plan - compare plans side by side — how much they’ll cost over time, both monthly and in total, and if any debt would be forgiven.
e. Use this log in to select any currently available Income Driven Repayment (IDR) Plan (Income-Contingent (ICR), Income-Based (IBR), Pay As You Earn (PAYE) or Revised Pay As You Earn (REPAYE)). If you wish to apply for Public Service Loan Forgiveness (PSLF) in the future, you must choose one of these repayment plans. If requested, enter income and family size.
f. If your servicer is Nelnet or Great Lakes, you may make a payment on this site.
2. Create/update your log in for your student loan servicer
a. Update your demographic and contact information - make sure they can reach you to give you important updates.
b. Opt in to start or restart auto-debit to maximize your chances of on-time, in-full payments. Update any changed banking information.
c. Use this log in to select Standard/Level, Graduated or Extended repayment plans. Standard/Level is the default if you don't make a selection.
d. Make your payment
3. After following #1 and #2 above, you can contact IonTuitionTM by logging into the IonTuitionTM portal or calling 855-693-4932. SPC partners with IonTuitionTM to assist our student loan borrowers with successful repayment.
Do you have any tips for me?
1. Take action now and be ready for repayment. Repayment really is going to start.
2. Review your budget and factor in your monthly loan payment.
3. Default has serious consequences - wage garnishment, no financial aid, revocation/denial of professional licensure).
4. Student loans cannot be discharged in bankruptcy.
5. If you have questions, use studentaid.gov or your servicer's website for research, then their chat function, then Live Chat if it is available. If you still need help, make a phone call.
6. Be patient with servicers and schools - millions of borrowers are starting repayment at the same time
7. Keep good records and documentation (including dates) - what research you did, screenshots of your student loan account and chats, who you talked to, etc.
8. Avoid scams! See information above.
9. Be diligent and don't give up!
What if I can't make my payments?
If you cannot afford to make payments, call your servicer, who can assist you with selecting a repayment plan, including income-driven repayment. Other options include deferment and forbearance.
Has anything else changed with existing income-driven repayment programs?
Yes. In April, the Education Department said it would make fixes to address past inaccuracies that would help borrowers enrolled in Income Driven Repayment (IDR) plans, including a one-time revision that would make more payments count toward loan forgiveness. That includes:
1. Any months in which borrowers made payments will count toward IDR, regardless of the repayment plan.
2. All payments made on loans that were later consolidated will count.
3. Months spent in deferment before 2013 (with the exception of in-school deferment) will count.
4. Forbearances of more than 12 consecutive months and 36 cumulative months will also count toward forgiveness, under both IDR and PSLF.
Will there be any new repayment plans to choose from?
There is a PROPOSED Income Driven Repayment Plan.
Payment amounts would be based on income and type of debt. For undergraduate loans, borrowers would pay 5% of discretionary income, down from 10-15%. For graduate loans, borrowers would pay 10% of discretionary income on that portion. If you hold both undergraduate and graduate debt, your payment will be weighted accordingly.
Borrowers with original loan balances of less than $12,000 would make monthly payments for 10 years before cancellation, down from 20 years.
More low-income workers would qualify for zero-dollar payments. No borrower earning under 225% of the poverty level (approx. $15 minimum wage) — will have to make a payment.
Loan balances will not grow as long as borrowers make their monthly payments, even when they are not required to make any payments because their income is too low.
This is still a PROPOSAL and has not been finalized or enacted.