As the US Supreme Court ruling on the Student Loan Cancellation plan is around the corner, some speculate that the highest court might rule in favour of Biden. If the SC reverses the rulings of the lower courts then it will be a relief to millions of students.
If the aforementioned speculation turns into reality, then the US Department of Education will have to move quickly. The department will have to approve loan forgiveness applications fairly quickly to benefit more students.
Under the Federal Loan Forgiveness Plan, student debt of $10,000 remains cancelled. Given that, the Education Department holds these student loan debts. Additionally, Pell Grants beneficiaries are also eligible for up to $20,000 in debt cancellation. Moreover, borrowers with adjusted gross income less than $125,000 are also eligible for the loan cancellation plan.
US Education Department Loan Forgiveness Plan
Furthermore, the US Education Department Loan Forgiveness Program offers loan forgiveness options for eligible borrowers with federal student loans. The program provides relief to borrowers who work in certain public service professions or in specific repayment plans.
Key features of the program include:
- Public Service Loan Forgiveness (PSLF): It considers borrowers working full-time for a qualifying employer. These borrowers are eligible for loan forgiveness after making 120 qualifying payments.
- Teacher Loan Forgiveness: Further, teachers who work full-time in low-income schools or educational service agencies may qualify for loan forgiveness. Teachers must earn up to $17,500 after five consecutive years of service.
- Income-Driven Repayment Plans (IDR): Moreover, borrowers who enrol in income-driven repayment plans are eligible for loan forgiveness. IBR (Income-Based Repayment, REPAYE (Revised Pay As You Earn) or PAYE (Pay As You Earn) are IDR payment plans. Eligible borrowers must make a certain number of payments (usually 20 or 25 years).
- Closed School Discharge: Furthermore, borrowers whose school closes while they are enrolled or within 120 days of withdrawal may be eligible for loan discharge. This means the government forgives the loans. Finally, borrowers no longer need to repay loans.
- Total and Permanent Disability Discharge: Additionally, borrowers with a total and permanent disability may be eligible for loan discharge. However, they must meet specific needs.
Pell Grants
Pell Grants are federal grants provided by the US Department of Education to eligible UG students with financial needs.
Key features of Pell Grants include:
- Pell Grants are awarded based on the student’s financial need. Students are selected through the Free Application for Federal Student Aid (FAFSA) form.
- They are a form of financial aid. Students must not repay this aid.
- The maximum Pell Grant award for the 2022-2023 academic year is $6,495. However, the actual award amount can vary based on multiple factors. Student’s Expected Family Contribution (EFC), enrollment status, and cost of attendance are the factors.
- Further, these grants can be awarded for up to 12 full-time semesters or the equivalent for part-time study. Authorities reexamine students’ FAFSA applications each year.
- Furthermore, to be eligible for a Pell Grant, students must be U.S. citizens or eligible non-citizens who study in US. Additionally, they must have a high school diploma or equivalent. Or they are enrolled or accepted in an eligible degree or certificate program. Furthermore, borrowers must show financial need.
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