Borrowers of federal student loans have been expecting debt relief since President Joe Biden unveiled a $10,000 forgiveness proposal in late August.
After a month of planning, applications will be available in early October. “Nearly 700,000 Michiganders will have their debt cut in half or eliminated entirely, lifting a huge burden off their backs. People can use these savings to buy a home, start a business, get married, or start a family,” Gov. Gretchen Whitmer stated in a release last month.
One in every seven Michigan citizens currently has a student loan, totaling $51 billion. The average Michigan college student now graduates with $36,000 in student loans.
In Michigan, 203,200 people have a balance of less than $5,000. Another 221,500 people have a balance of $5,000 to $10,000.
The average student loan debt in the state is $36,116. Michigan has 1,412,100 student loan debtors. 52.0% are under the age of 35. 14.0% of residents in the state have student loan debt. 16.0% of indebted student borrowers in the state owe less than $5,000. 21.6% owe between $20,000 and $40,000 (an average of $28,642). More than $200,000 is owed by 2.0% of the population.
President Biden’s plan is meant to target those who are suffering the most from financial hardship, and are yet to receive the benefit from having attended college. Debt forgiveness is available to federal student loan debtors who earn less than $125,000 if they are single or $250,000 as a married couple in 2021 or 2020. People who match the income standards and get a Pell Grant (of any size, at any time) are eligible for up to $20,000 in debt reduction. Visit studentaid.gov to determine whether you qualify for Pell Grant forgiveness.
While waiting, consumers should check their contact information at studentaid.gov and with service providers including Nelnet, Mohela, and Navient. When debt relief is applied to a borrower’s amounts, loan servicers will notify them.
When applications open, the US Department of Education will notify applicants through email and text message. Don’t forget that student loan payments and interest rates will resume on January 1, 2023.
Online applications will be available in early October. Borrowers who are eligible must apply by December 31, 2023.