The student debt relief plan has given schools and students some clarity regarding federal loan forgiveness and payment resumption. However, details are still emerging from various sources and sites.
Here’s what we know regarding borrower eligibility and implementation details as of Sept. 1, 2022.
To qualify for $10,000 in federal student loan debt relief, a borrower must have:
Not all loans qualify for debt relief. These include:
For borrowers with multiple qualifying loan types, ED will apply the relief first to defaulted Direct Loans and FFELP loans, then active Direct Loans and finally Perkins Loans. For loans of the same type, pay down will occur in the following order:
1. Loans with the highest statutory interest rate. You can find historical interest rates here.
2. If interest rates are the same, unsubsidized loans first, then subsidized loans.
3. If interest rate and subsidy status are the same, the most recent loans.
4. If interest rate, subsidy status, and disbursement date are the same, the loan with the lowest combined principle and interest balance.
Repayment will resume on Jan. 1, 2023. We actually believe them this time, but all bets are off if there is a legal challenge.
Student Connections is the industry leader in student loan counseling and default prevention services. We are driven by our passion to help borrowers navigate the ins and outs of student loan repayment ─ and in this case, receive the full amount of debt relief they are entitled to receive.
Contact us to learn how we can help your borrowers.