‘Be mindful of what you’re borrowing’: Financial Aid office breaks down Biden’s student loan forgiveness plan
In August, President Biden announced a student loan forgiveness plan canceling up to $20,000 of student loan debt for many borrowers. In response, the executive director of Scholarships and Financial Aid at the University Briget Jans has broken down details about the program and how eligible student borrowers are impacted.
Most students impacted by the forgiveness program are borrowers of direct federal loans held by the government. Loans borrowed prior to June 30 are eligible for forgiveness. Other requirements include earning less than $125,000 annually to receive up to $10,000 in forgiveness and borrowers with a Pell Grant can receive up to $20,000.
“It’s really helping people who are already in loan repayment more than it would impact like freshmen, for example,” Jans said. “Be mindful of what you’re borrowing and that’s something that we always try to stress. We will tell someone what their maximum eligibility is, but if you don’t need to borrow the maximum eligibility to get through the school year, then borrow exactly what you need and don’t borrow more.”
According to Federal Student Aid, the public service loan program forgives the remaining balance on your direct loans after making 120 monthly repayments. Requirements also include being employed by any federal, state, tribal or local agency while working full time.
Jans shared that the forgiveness plan helps burdened borrowers who are finding it difficult, between loan repayments and interests, to pursue the next phase of things such as buying a house or getting married.
Since Biden’s announcement, the Office of Scholarships and Financial Aid have received higher call volumes about student loans and seen more students taking out loans with misunderstandings that loan forgiveness doesn’t apply for this academic year.
Currently, the Department of Education is developing the student loan forgiveness application, but borrowers can be provided with updates about the application and programs.
“There’s a website that they can go to subscribe for updates on any new information about the program,” Jans said. “The key piece of that is that is the website where if they sign up for the subscription, they will get notified as soon as the applications are available.”
Jans said that when someone takes out a loan through the University, they’re actually borrowing from the federal government. Since there aren’t people to process the loans, they “contract with different companies” or service providers who handle the repayment process.
Jans emphasizes that it’s critical for anyone interested in the forgiveness program to make sure they know who their servicer is but also that their loan servicer has their correct contact information. On the student aid website, borrowers are able to look at their records, contact who their servicer is and see whether or not they have a Pell Grant.
“If you’ve moved and your servicer is mailing something to your old address or you use a different email address, you’re not going to have the latest information,” Jans said.
Some students, like public policy junior Angela Norris, feel optimistic about the program’s goals.
“I think that the plan is a good step in the right direction and will help alleviate the financial burden from many low-income students,” Norris said.
Individuals with student loan debt can focus on investing their income into what they want without the burden of the monthly payment, according to Jans.
“Everything that people do once they hit adulthood pretty much gets driven by how much money they have available to use for those choices that would make,” Jans said. “And this will just give a whole lot of people a little more choice. A little more ability to do what they would really like to do with these resources.”