Millions, including many in Illinois, who owe money in federal student loans will have those debts forgiven under a plan announced by President Joe Biden on Wednesday.
Here's what to know about the plan and what it could mean for state residents:
Which Loans are Eligible for Student Loan Forgiveness?
If your student loan was financed through the federal government, you may be eligible for forgiveness. Private loans are not currently eligible for the forgiveness plan.
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What is the Difference Between a Private Loan and a Federal Loan?
Federal loans were generally offered to you by the federal government through your school after you completed a Free Application for Federal Student Aid, or FAFSA. Private loans were obtained by other outside lenders, such as a bank or credit union.
What are the Income Requirements for Forgiveness?
To be eligible for forgiveness, the borrower must make $125,000 or less as an individual or $250,000 if married or a head of household.
How Much Debt Can Be Forgiven?
Up to $10,000 can be forgiven, or up to $20,000 if you received a federal Pell Grant when you were in college.
What Do I Have to Do For My Loan to Be Forgiven?
About 8 million people will be eligible to receive relief automatically because the U.S. Department of Education already has their current income information, the administration said.
If the agency doesn't have your current income information or if you don't know if it does, you will need to fill out an application. That application is not yet available, but will be in the coming weeks, the administration said in its announcement.
To be notified by the U.S. Department of Education when the application is open, sign up at the Department of Education subscription page.
What is a Pell Grant and How Do I Know If I Got One?
The Pell Grant is a monetary award from the federal government for students who have demonstrated a heavy financial need. Many FAFSA applicants receive this award. If you review your financial aid package letter from your school, you should see the Pell Grant listed there if you received one.
What is the Public Service Loan Forgiveness Program?
Borrowers who are employed by nonprofits, the military, or federal, state, Tribal, or local government may be eligible to have all of their student loans forgiven through the separate Public Service Loan Forgiveness program.
Learn more about who is eligible and how to apply here.
When Does Student Loan Repayment Start For Those Who Still Owe?
The moratorium on student loan payments has been extended again through Dec. 31, 2022. The administration says this will be the last extension and that borrowers whose debt will not be forgiven should plan to begin repayment in January 2023.
How Much Student Loan Debt do Illinoisans Have?
According to Educationdata.org, a site that researches education information across the U.S., "Illinois residents are slightly less likely to have student loan debt but have a higher average balance remaining."
The average student loan debt in Illinois is $37,757, according to the site, with more than 1.6 million student borrowers living in the state. Of those, more than half are under the age of 35 and more than 20% owe more than $20,000.
What Else Can Borrowers in Illinois Do to Lower Their Payments?
There are a number of student loan repayment and forgiveness programs in the state. For a full list, click here.
