Make Ends Meet: Student loan debt relief

Date:

LOUISVILLE, Ky. (WAVE) — The move to cancel student loans for millions of Americans has sparked much debate, both pros and cons.

on August 24, President Biden, Vice President Harris and the US Department of Education have announced plans to help working and middle class borrowers of federal student loans.

Biden invoked the 2003 Heroes ACT, a law passed after the September 11 attacks, to cancel up to $20,000 in education loans for millions of borrowers.

Suzanne Powell, financial advisor and author of “Make More Money Making These 5 Money Moves”, wants student loan borrowers to know they won’t get a check in the mail for their student loan debt.

“It’s going to be a process,” Powell said.

If someone qualifies for the debt relief funds, that money will go out of their loan account. Details of the emergency aid program will be worked out by the Ministry of Education in the coming weeks or months.

“You don’t want to be one of those people who just sit there and think it’s going to happen,” Powell said. “Go to the website of the Ministry of Education. Get yourself on the radar. You ticked all the boxes.”

People can go to the website now and request to be notified when the application process is open.

The United States Department of Education will provide up to $20,000 in debt forgiveness to Pell Grant recipients with loans from the Department of Education and up to $10,000 in debt forgiveness to non-Pell Grant recipients.

To qualify, annual income must be less than $125,000 for individuals or $250,000 for married couples or heads of household. People will also have to have their tax returns filed.

“They’re going to use tax returns for 2020 and/or 2021,” Powell said. “If you haven’t filed a tax return, if you’re not inclined to file a tax return because of COVID, unemployment, whatever… then you need to be caught up. This is important.”

A person’s deduction is capped at the amount of their outstanding debt. If a person qualifies for $20,000 in debt relief but has a balance of $15,000 left, they will receive only $15,000 in relief.

“Your payment won’t change,” Powell said. “Good news is that more of your payment goes to the principal, because less interest is now accruing on a smaller balance.”

“Your student loan payment will only change if what you do has changed,” Powell added. “You know, if you’re having a hard time or changing jobs, your pay stays the same.”

Powell also shared a reminder that there is no such thing as a free lunch. Millions of Americans will receive financial aid from student debt forgiveness, but many fear it would shift the cost to Uncle Sam.

“They’re going to get the money back from something else in a different way,” Powell said. “Like the stimulus money that everyone received, it was great that everyone got what they needed, and they got through it and it was very important, but now we’re staring at inflation, which is just the byproduct of the stimulus checks.”

This will be a process and not all details have been worked out yet. If someone takes out a loan after July 1 this year, they most likely will not qualify for President Biden’s debt relief.

However, for anyone who still owes a student loan, the president is also working on a new income-driven repayment plan.

According to the Ministry of Education, this new income-driven repayment plan will cut monthly payments for undergraduate loans in half. Monthly payments are capped at 5% of the borrower’s discretionary income.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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