(Credit Cafe) President Joe Biden announced the White House’s plan for student loan forgiveness a few months ago and the application has gone live this week.
By Melanie Escalante
The cancellation of federal student loans up to $10,000 and Pell Grants up to $20,000 has set abuzz the phones and emails of financial aid officers across the country. So, what are the questions Texas Tech students ask most often?
Many students have been asking whether their loans would be forgiven if they were to take them out now without having borrowed before, said Joshua Hernandez, Texas Tech’s assistant director of financial aid.
The answer is no because the cutoff date was June 30.
“That means all disbursements or funds that were released after June 30 of 2022 do not qualify,” Hernandez said.
Some universities, such as Florida State and Granite State, have set up pages to answer frequently asked questions about loan forgiveness. Texas Tech has not released any information about loan forgiveness because it is not yet prepared to comment on the program, said Allison Hirth, Texas Tech’s senior director of media and public affairs.
A 10-line application for student loan forgiveness is now available online and will close on December 31, 2023. Eligible borrowers must have an income of less than $125,000, or $250,000 for married couples.
Current and future borrowers, on the other hand, can look forward to a less burdensome way to repay their loans. The Department of Education has proposed a new income-driven repayment plan that would cap monthly undergraduate loan payments at 5% of each borrower’s personal income without personal taxes.
“That’s going to be the big impact for those middle-income families that are in repayment and have an income-driven repayment plan,” Hernandez said. “They can have lower payments once the payment pause is lifted.”
He recommended students contact financial aid officers to verify their loan information and avoid taking out money just because they can.
“Only utilize that funding that you need because those balances can grow,” Hernandez said.
Students’ federal loans are already capped by financial aid offices by law. Rob Kniss, executive director of Texas Tech’s Office of Financial Aid and Scholarships, said every financial aid office is required to estimate each student’s cost of attendance.
“It’s the amount of money we feel a student is going to need to be successful during the academic year,” Kniss said. “They might not need to borrow or get all that funding up to that level depending on what their enrollment is and depending on what their housing is, too.”
To students seeking to improve their financial literacy, Kniss recommended Red to Black, a Texas Tech peer organization. The group teaches skills such as budgeting and finding the best credit card for one’s needs.
The Office of Financial Aid and Scholarships is also available to answer questions about how to save more and spend less.
“We will, if a student comes in and we need to counsel them on certain things,” Kniss said. “Absolutely—that is our job.”
