Student Loan Debt

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Update 09/26/2022: Up to $20,000 in Federal Student Loans May be Forgiven for Each Borrower

The pause on federal student loan payments has been extended through December 31, 2022. This is supposed to be the last extension of the pause that started in March 2020.
The U.S. Department of Education announced that they will provide up to $20,000 in federal student loan debt cancellation to Pell Grant recipients and up to $10,000 in debt cancellation to non-Pell Grant recipients.
To be eligible for this forgiveness, your 2020 or 2021 taxes must show income less than $125,000 a year for an individual and $250,000 for married couples or heads of household.
You may receive the relief automatically if the Department of Education already has your income information on file, but the U.S. Department of Education recommends completing the forgiveness application to ensure you receive forgiveness.
There will be a simple application available in early October. To find out when the application is available, sign up for US Department of Education news at their subscription page.
Apply for forgiveness before November 15th to miss having to start payments on your loans again in January 2023. Applications will continue to be processed after the pause expires December 31, 2022 and will be available until December 31, 2023.
Applications should be processed within 4-6 weeks.
Some states, including North Carolina, may count any forgiven debt as income. This means that you could owe the State of North Carolina more in taxes for 2021 if your federal student loan is forgiven. The extra amount owed to the State of North Carolina will depend on the amount of debt forgiven. Read more about the possible tax burden.
Update your contact info at studentaid.gov and with your student loan servicer.
To find out more, read the Federal Student Aid announcement. Most federal student loans are eligible for the forgiveness, and you can check your eligibility at this website.

Update 09/26/2022: Delinquent and Defaulted Student Loans will be Brought Current When the Pause Ends

If your federal student loans were in default or delinquent before the pandemic, your loan may be brought current (given a “fresh start”) once the pause ends December 31, 2022.
If your loans are eligible, the “fresh start” on your federal student loans will last one year after the pause on payments ends.
You will temporarily regain access to these benefits, have the opportunity to get out of default, and to keep those benefits for the long term.
Some of these benefits include access to federal student aid again, stopped collection efforts, and eligibility for other government loans, such as a government backed mortgage.
Your eligible loans will start to be marked as “current” rather than “in collections” later this year.
The U.S. Department of Education will be reaching out to you later in the year to let you know what you need to do to make sure that your loans don’t go back into default or become delinquent again once a year has passed. There are multiple repayment options based on income. You can talk with your student loan servicer about these options once you enter repayment.
While you wait to hear what you need to do next, make sure your federal student loan servicer has your correct and up to date contact information. If you don’t know who your loan servicer is, contact the Default Resolution Group to find out.
Read the studentaid.gov webpage on the “fresh start” initiative to find out more and to see if your federal student loan might be eligible.

Update 09/26/2022: The Limited PSLF Waiver is Set to Expire October 31, 2022

The temporary waiver for Public Service Loan Forgiveness (PSLF) will expire on October 31, 2022.

This short-term waiver can assist you in counting past periods of repayment toward your federal student loans that were not counted toward the 120 months of qualifying payments in the past. This waiver could reduce or eliminate federal student loan debt.

You must work in a public service job, such as jobs with the government, nonprofits providing certain public services (military service, law enforcement, early childhood education, public health, and many more).

To find out more about the Limited PSLF Waiver, you can visit the NC Department of Justice website.

Update 08/01/2022: Federal Student Loan Payments Set to Resume Soon & How to Apply for Public Service Loan Forgiveness (PSLF)

Federal Student Loan payments are set to start again in September.

Unless there is another pause on federal student loans, your federal student loan payments will start again in September of 2022. The current pause ends August 31, 2022.
You should get a billing statement or other notice from your student loan servicer at least 21 days before your first payment is due.
Consider making a budget plan to pay your student loan payment or reach out to your student loan servicer to see if you’re eligible for an income driven repayment plan.
To find out more about the federal student loan payment restart and how to prepare for your student loan payments, visit the student aid government website.

If you are eligible for Public Service Loan Forgiveness (PSLF):

PSLF is a federal program that allows non-profit employees, state and federal employees, and employees in schools get part or all of their student loans forgiven after 10 years.
You can more easily apply for forgiveness temporarily by completing a waiver and other required steps, but this relaxing of rules will end October 31, 2022.
Under these temporary rules, any of your prior periods in student loan repayment will count regardless of the type of federal loan program (including FFEL loans if consolidated), repayment plan, or if payments were made on time. You still need to work at a qualifying employer.
To find out more about changes to PLSF through October 31st and what next steps you need to take, you can read more on the student aid website.

Update 4/27/2022: Federal Student Loan Pause Extended, Extra COVID-19 SNAP Benefits to Expire, and Facilitated Self-Assistance for 2021 Taxes Still Available

The Pause on federal student loan payments has been extended.

The pause on federal student loan repayment, interest, and collections has been extended until August 31, 2022.
Payments are expected to resume in September. You should hear from your student loan servicers about 21 days before the first payment is due.

Fresh Start for delinquent/defaulted student loans:

The Department of Education also announced a “fresh start” on repayment of federal student loans for those who were delinquent or in default on their student loans prior to the pandemic.
When payments resume, delinquent and defaulted federal student loan borrowers will be put back in “good standing,” meaning your loans will be current without you needing to work out a plan with them.
Make sure to get your federal student loan servicers your updated contact information so they reach you about your payment restarting or to talk to you about keeping your loan on-time once the loan is put back in “good standing.”
If you don’t know which servicer your federal student loans are with, set-up, get your account information, or sign into FSA ID. This is a government website that puts all of your federal student loans and student loan balances in one place.

Reminders for everyone with student loans:

Don’t ignore your student loans! There are income driven repayment plans if you cannot afford your monthly payment. If you want to find out what you’re eligible for, reach out to your student loan servicer before payments restart.
Read more from the Department of Education
To find out more details, read the news article

Update 10/27/2021: Student Loan Changes- Public Service Loan Forgiveness and Servicers

The U.S. Department of Education announced changes to their Public Service Loan Forgiveness Program (PSLF).

What you need to know:

Do you have federal student loans and work for a government or not-for-profit agency?
If you answered yes, then you may be eligible to work towards Public Service Loan Forgiveness (PLSF) for your federally backed student loans, even if your application or your past payments for PSLF were turned down before.
If you have federal student loans, including Federal Family Education Loans (FFEL), and work and worked for an employer that qualifies, you may be eligible to receive credit towards PSLF for past payments through October 31,2022.
Payments will count towards PSLF regardless of loan type, the payment plan you were on, and whether the payment was made in full or on time.
The new rules still require you to have had qualifying employment full-time (or qualifying part-time employment that adds up to at least an average of 30 hours per week) with a government agency, a 501(c)(3) not-for-profit, or other not-for-profit organization that provides a qualifying service when the payments were made. This is for payments made after October 1, 2007. To see if your employer qualifies for PLSF, go to the PLSF Help Tool
Direct Loans are eligible. If you have other loan types, such as FFEL loan or a Perkins loan, you will need to consolidate your loans into a Direct Consolidation loan before October 31, 2022 to count the past payments you made towards PSLF.
Parent PLUS loans are still ineligible for PSLF forgiveness.

What do you do next?

Visit Federal Student Aid to learn more and follow the steps outlined under the Public Service Loan Limited Waiver Opportunity

FedLoan, Navient, and Granite State will not be servicing federal student loans anymore.

What’s going on with all the changes in student loan servicers?

Three Federal student loan servicers (FedLoan, Granite State, and Navient) will no longer be servicing your federal student loans.
If any of your federal student loans are with these servicers, your loans will be transferred to a new servicer before the end of 2022.
You do not need to anything for your loan to be transferred to a new student loan servicer, and you should receive notice from Department of Education, your old servicer, and your new servicer about any next steps you need to complete.
The terms of your loan (interest rate, years to pay loan back) will not change.
Find out more about the changes in student loan servicers

You may want to:

Make sure all your contact information is correct with your current student loan servicers.
Log into your current student loan servicer’s website and print out or write down your loan information (current balances, interest rates, monthly payment amounts, and payment history) and keep this information as a record.
Read more about the federal student loan transition

Update: 9/29/2021 (revised 5/10/2022) - Let’s Get Clear about COVID Student Loan Debt Relief

Federal Student Loan Payment Suspension and Interest Set to 0% through May 1, 2022.

The CARES Act passed on March 30th has put an automatic suspension on all federally backed student loans and set the interest rate to 0% from March 13, 2020 to August 31, 2022.
The payment suspension was extended to August 31, 2022.
This means that people with those loans do not have to make payments and no interest will be accruing on the loan during that time.
This does not apply to all student loans. Some FFEL loans are backed by private lenders and some Perkins Loans are owned by the college attended and may not be included in these protections. If you are unsure if your Perkins or FFEL Program Loans qualify, go to your student loan account online to check.
Read more here.

Suspended Payments Count Toward Public Service Loan Forgiveness and Income-Driven Repayment Plan Forgiveness

Through August 31, 2022, payments suspended due to the CARES Act and the executive order that followed will count towards any student loan forgiveness program, as long as all other requirements of the loan forgiveness program are met.

Assistance for Some FFEL & Perkins Loans and Other Private Student Loans

If your FFEL Program Loans are not eligible for these concessions, we recommend you:

Ask your servicer if a forbearance is an option. Your interest will still accrue, but this is an easy option to sign up for by talking with your servicer and will give you time to get in a more stable financial position.
Ask for an unemployment deferment if your work hours have been cut to below 30 hours a week or you’ve lost your job due to COVID-19. For some loans, interest will not accrue in that program.

For other private loans, we suggest you follow up with the servicer to see what options they are giving for the COVID-19 pandemic. Several private student loan servicers are offering options. Read more here.

Relief for Student Loans in Default

The Department of Education has stopped the collection of defaulted federal student loans, including garnishment of wages and the offset of tax refunds and Social Security benefits.
The CARES Act also suspends interest for federally owned loans that are in default, through August 31, 2022.
There is no additional action required from you, if collection activities on your federally owned loans have already been suspended. If collection activities on your defaulted federal loans continue, contact your loan holder to find out about your options.
If you are rehabilitating a defaulted student loan, any missed payments due to the coronavirus pandemic will not be considered a missed payment against your rehabilitation.
Visit the Department of Education’s website to learn more about rehabilitating a defaulted federal student loan.

If you have additional questions about your student loans being impacted by COVID-19, visit this FAQ page from the Consumer Financial Protection Bureau (CFPB).