Beneficiaries of federal student loans must start loan repayments in the early fall of 2023. This repayment schedule is advisable for all borrowers. By doing so, they will have a better hold over their finances if they start paying loans early.
This extension is the ninth one in the loan forgiveness plan of the Biden Government. Under President Biden’s plan, individuals can apply for loan forgiveness of up to $20,000 for federal student loans. Currently, borrowers can defer payments. No interest is levied on the payments. Presently, the collection activities for defaulted loans are halted for some time.
If the Supreme Court issues a ruling on the program prior to June 30, individuals with remaining loan balances will be required to start loan repayments 60 days after the court’s decision. However, if the court has not reached a decision by June 30, the pause on payments will end 60 days after June 30, which will be the end of August.
Individuals can get in touch with their student loan givers to inquire about the repayment plan choices available to them. These options include income-driven repayment plans. Under this plan, the payment amount is determined by the borrower’s income and family size. Additionally, there is the Public Service Loan Forgiveness (PSLF) program. PSLF is designed for individuals in public service jobs.
Public Service Loan Forgiveness (PSLF) program
The Public Service Loan Forgiveness (PSLF) program includes the following key clauses:
- Employment in Public Service: Primarily, borrowers must be employed full-time by a qualifying public service organisation. These organisations include government organisations, non-profit organisations, and certain other types of public service employers.
- Direct Loan Qualification: Only Federal Direct Loans are eligible for forgiveness under the PSLF program. Moreover, borrowers may need to consolidate other types of federal loans into a Direct Consolidation Loan to make them eligible.
- 120 Qualifying Payments: Borrowers must make 120 qualifying payments while working full-time for a qualifying public service organisation. Borrowers have to repay loans under a qualifying repayment plan and within 15 days of the due date.
- Qualifying Repayment Plans: Borrowers must enrol in an eligible repayment plan, such as an income-driven repayment plan, to make the qualifying payments. Furthermore, standard 10-year loan repayment plans are not eligible.
- Certification and Verification: Borrowers need to produce an Employment Certification Form yearly or when they change employers to verify their eligibility for the PSLF program.
- Forgiveness Application: After making the 120 qualifying payments, loan takers must submit the PSLF application to request forgiveness of their remaining loan balance. The forgiveness amount is tax-free under current laws.
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