On Friday, the Biden administration announced $39 billion in student loan debt relief just a few weeks after the Supreme Court struck down the administration’s student loan forgiveness plan. Back with us today to help make sense of what’s going on and to get you ready for student loan payments to resume is money expert Janai Thornton.
Who is Getting Help?
Janai Thornton: So this is a major news story that broke on Friday, and I want to make sure everyone understands what’s going on. So you’re right. Millions of student-owned borrowers have already earned loan forgiveness, but just never received it. So the government is finally making good on its promise and forgiving student loan debt for 804,000 borrowers.
But get this. This only applies to people who’ve been making payments for at least 20 years. Again, I think 20 years. But people, most people don’t understand that. So obviously if you have not been making payments for at least 20 years, you are not eligible for this
So what additional changes have the Biden administration made to help student loan borrowers whose loans will not be forgiven?
So, as we all know, payments are going to resume in October. But there are a couple of key changes that the Department of Education made to help folks out.
Number one, they’re offering a more affordable repayment plan. So now if you apply for the income-driven repayment plan, your payment can be reduced by almost 50%. So that’s good news. And number two: If you are late on payments or if you miss any payments, the Department of Education will not be reporting them to credit reporting agencies for 12 months.
For the parents who have Parent PLUS loans, are they eligible for any relief with reduced payment plans?
Well, you know, I don’t understand why the Biden administration did not include relief for parents who have Parent PLUS loans. There are over 3.7 million parents with over $100 billion in parent loan debt. They get no relief from all of these changes. So they have to get ready to make full payments again beginning in October.
The Federal Trade Commission has warned that scammers would likely start to target student loan borrowers. What can people do to protect themselves?
Well, the Federal Trade Commission is expecting a lot of problems because you think people have been waiting for years for the student loan release. And so they think scammers are going to be coming for people. So three things people need to pay attention to:
Number 1. Please don’t trust anyone who promises debt relief or full loan forgiveness, OK? If it sounds too good to be true, it probably is.
Number 2. Please don’t ever give your FSA your federal student aid ID login information to anyone. The FTC says if anyone asks for this, they are absolutely a scammer.
And number 3. Never pay for help with your student loan. There’s nothing that a company can offer you to do that you cannot do for yourself.
What final message would you leave with us today?
So this is for parents and students, but also for everyone who’s listening. If it takes four to six years to attend college, should it take 20 to 30 years to pay for it? Give that some thought before you get some student loans.
Money Expert Answers Questions About Biden’s New Student Debt Forgiveness Plan was originally published on getuperica.com
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