Can parents apply for Student Loan Forgiveness?
The widespread student debt relief initiative has been halted by legal challenges but the White House is hopeful of finding a swift resolution.
The Student Loan Forgiveness proposal forwarded by President Biden provides up to $20,000 of debt relief for borrowers. Although this typically refers to the student who benefitted from the loan, parents who took at a Parent PLUS loan to pay for their child’s college education can also receive the support.
It is thought that around 3.7 million families have outstanding Parent PLUS loans, totalling around $104 billion according to The Century Foundation.
Parents with an outstanding Parent PLUS loan from the federal government and household earnings of less than $250,000 ($125,000 for a single parent) will be able to claim up to $10,000 in debt forgiveness. There is another $10,000 of relief for parents whose child received a Pell Grant.
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When will Student Loan Forgiveness be introduced?
However at the moment neither parents nor students will be able to apply for Student Loan Forgiveness after the White House temporarily closed the application process. It comes as a federal appeals court in St Louis issued a temporary ban on the program after claims that Biden overstepped his executive authority to approve the measure.
The White House is confident that the program will go into action once the legal hurdles have been cleared. However the timeline will likely take long than initially hoped.
This week the Department of Education has started sending out letter to borrowers who applied for Student Loan Forgiveness.
CNBC report that the letters, sent out by Education Secretary Miguel A. Cardona, read: “We reviewed your application and determined that you are eligible for loan relief under the Plan.”
However the note continues by saying: “Unfortunately, a number of lawsuits have been filed challenging the program, which have blocked our ability to discharge your debt at present.”
This would be a major problem for borrowers as we approach 31 December, the final day of the moratorium on student loan repayments. Unless another extension is agreed then payments will have to resume in January and interest would once again begin accruing on the outstanding balance.
Biden will be desperate to secure a resolution in the coming weeks to offer peace of mind to student debt borrowers.