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What you need to know about loan forgiveness and the student loan pause

President Biden has granted loan forgiveness on student loans.

Graphic of a hand throwing a graduation cap patterned with a $100 bill design into the air to symbolize student loan forgiveness. Credit: Reviewed / Getty Images / sturti / alexsl

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President Biden will cancel up to $10,000 in loan forgiveness per student borrower through an executive order, excluding borrowers who make more than $125,000 per year and households that make more than $250,000 per year. An extra $10,000 in loan forgiveness per student goes to Pell grant recipients. He also extended the pause on student loan payments through December.

Do I still have to pay off my student loan?

That depends. In most cases, you will probably have to pay off at least part of your student loan.

The government has announced it will forgive up to $10,000 in student debt per person. This amount increases to $20,000 for those on Pell grants. Only those with yearly income less than $125,000 or household income less than $250,000 are eligible for debt forgiveness. What this means is that If your student loan is less than $10,000 (or $20,00 for those with Pell grants) and you don’t make more than the income cap, then you no longer need to pay off your student loan. You must still repay if your income exceeds $125,000 (or a household cap of $250,000). You will still need to pay off the remainder if your student loan is more than $10,000. If your student loan is, for example, $15,000, $10,000 will be forgiven, and you will still need to pay $5,000.

Your full loan will be forgiven if your student loan is less than $10,000. If your student loan is for example, $15,000, $10,000 will be forgiven and you will still need to pay $5,000.

What about private student loans? Are they included in the loan forgiveness?

No, private student loans are not part of President Biden’s loan forgiveness program. You’ll have to continue paying those loans as agreed.

Should I keep paying off my student loan before the pause ends?

Graphic of a sheet of paper titled “Student Loan Forgiveness.”
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Student borrowers have enjoyed a pause on their federal student loan payments since March 2020.

Yes, if you can afford it.

You may make payments if you wish, which will lower the loan amount that interest will be applied to when payments resume in January.

How else can I eliminate student loan debt?

You can eliminate student loan debt in the Public Service Loan Forgiveness program by working full-time in public service jobs. These jobs include working for the federal, state, local and tribal governments, military service, and not-for-profit organizations. If you worked these jobs for ten years or more, you might be eligible to have all your student loans forgiven in this program. Apply before Oct. 31, 2022.

Am I collecting interest on my current federal student loans?

No, there has been a pause on student loan interest as well. This pause on interest includes student loan borrowers who are still in college. There also has been a stop on the collections of federal student loans.

When do student loan payments begin again?

Federal student loan payments resume in January 2023.

Will student loans be paused again?

Close-up of the hands of a man sitting at a coffee table using his calculator to reflect as he works on his finances.
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During the pause, borrowers are not required to make student loan payments.

No, the government has announced that this is the final extension of the federal student loan repayment pause.

What if I can’t pay my federal student loans in January?

You may apply for forbearance. With forbearance, you make a smaller payment or temporarily skip payments. During forbearance, interest continues to accrue on the loan. Reasons to request forbearance include financial troubles and a change in jobs. Reach out to your student loan servicer and ask about forbearance.

Another option for federal loan borrowers is deferment. Deferment also temporarily stops the payments of student loans. For example, you may qualify for an economic deferment if unemployed. Deferments are also available to students with graduate fellowships and those in active or completed military service.

You also may switch to a payment plan with a more affordable monthly payment, such as the income-driven repayment plan.

What is an income-driven repayment plan?

With an income-driven repayment plan, your monthly payment is based on your income and family size. So if you aren’t making a lot of money, you’ll have a smaller amount to pay each month on your federal student loan.

How can I find out more about the status of my student loans?

Reach out to your loan servicer to discover the details about your federal student loans.

“It is a good idea for all borrowers to, as soon as they can, check on the status of their loan, confirm who their servicer is, and update their contact information by logging in to their StudentAid.gov account,” says Jessica Thompson, vice president of The Institute for College Access & Success.

When federal student loan payments resume, you want to determine how much you owe and how much your monthly payment will be. So you’ll have a plan for making payments.

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