Student Loan Forgiveness: What You Need To Know

President Joe Biden announced on Wednesday, August 24, 2022, that a student loan forgiveness plan would go into action this year for federal loan borrowers. Although specifics are still being announced, here’s what you need to know:

What is it?

President Biden has announced a plan for student loan relief in 2022. The plan will forgive $10,000 in student loans for individuals making less than $125,000 per year or married families/heads of household making less than $250,000 per year. For individuals who received a Pell Grant, the total amount of loans forgiven increases to $20,000. 

How do I enroll in the forgiveness program? 

President Biden has announced that many federal student loan providers already have borrowers’ tax information, and loans may be forgiven automatically. However, if this isn’t the case, or you want to ensure your loans are forgiven if you qualify, the Department of Education is planning to roll out a formal application program in the coming weeks.

What else does it include?

For those who have enrolled in an income-driven repayment plan (IDR), payments are now capped at 5% of your monthly income as opposed to the previous 10%.

Will loan payments continue to be paused? 

Yes. President Biden has issued a final pause on student loan payments through December 31, 2022. 

What about private loans?

This loan forgiveness plan only covers federal student loans. 

Now what? 

If you have questions, we encourage you to reach out. We are happy to help in any way we can! 

This commentary reflects the personal opinions, viewpoints, and analyses of The Dala Group, LLC employees providing such comments. It should not be regarded as a description of advisory services provided by The Dala Group, LLC or performance returns of any The Dala Group, LLC client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The Dala Group, LLC manages its clients’ accounts using various investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

Mike Heatwole

Mike Heatwole is a Certified Financial Planner™. He is the founder and CEO of The Dala Group. Mike graduated from the Illinois Institute of Technology with a bachelor’s degree in civil engineering and a master’s in Structural Engineering. His interest in financial planning began as a table leader for Dave Ramsey’s Financial Peace University, and shortly after, he changed careers to became a financial planner. He organically built The Dala Group, a wealth management firm, focusing on helping families achieve their lifestyle and legacy goals.

Previous
Previous

5 Retirement Savings Myths To Unlearn

Next
Next

What’s Your Net Worth? (And Why It’s A Big Part of Your Financial Story)