On August 24, U.S. President Biden announced the forgiveness plan of student loan debt. For those with an annual personal income of less than $125,000, or a family income of less than $250,000, $10,000 of student debt can be relieved. And those who have obtained a pell grant can be relieved $20,000 in student debt. Coupled with the current inflation condition, this latest policy is undoubtedly good news for working-class and middle-class families. Because from the perspective of American students, college education is generally expensive, and student loans are different from scholarships and financial aid, which generally requires repayment. Needless to say, the new policy will relieve the financial burden and provide the opportunity to pursue higher education.
So what is a good way for college students to apply for student loans and enjoy federal policy benefits?
1. First of all, federal student loans have more stable interest rates than private loans, so you can apply for this project on FAFSA (Free Application for Federal Student Aid) for free. This is the Need-Based Financial Aid provided by the U.S. federal government, and it needs to be applied for through the FAFSA system. About 22 million people in the United States apply each year, and the entire application process is free without additional payment. The specific requirements are as follows:
- Applicable to U.S. citizens and green card holders, not available to international students;
- At least part-time or full-time classes are required each semester;
- Proof of qualifications to prepare for admission to the degree;
- Maintain good academic performance in the college;
- Male students aged 18-25 need to register for military service;
- Meet anyone of the academic qualifications: possess a U.S. or foreign high school diploma or U.S. high school equivalency certificate/completed higher education in a federally recognized home teaching environment/pass the institution’s ability-to-benefit test results
2. There are three main categories in terms of specific classification, and students can choose according to their needs:
- Federal Direct Subsidized Loan – This federally subsidized student loan is available to eligible students. The maximum amount for this type of loan is $3,033 (per six-month course), depending on eligibility, education program, grade level, and prior loan debt under the program.
- Federal Direct Unsubsidized Loan – This federal unsubsidized student loan is offered to eligible students. The maximum amount for this type of loan is $8,233 (per six-month course), depending on eligibility, education program, grade level, and prior loan debt under the program.
- Federal Undergraduate Direct Parent Loan (PLUS) — This federally guaranteed parent loan is offered to parents of dependent students through qualifying lenders participating in the program. Parental eligibility is determined by credit requirements established by the lender. Parents who meet lender requirements can borrow up to the difference between the cost of education minus any financial aid the student receives.
3. After submitting the FAFSA application, you need to wait for the review of the Federal Ministry of Education.
Generally, in about three weeks, they will send a student aid report to students and schools. The report will list the families deductible money calculated based on the data you submitted. After confirming that the data in the student aid report is correct and sending it to the financial aid office, the school will start sending it out in early April, which will explain the cost of the student for one academic year and the forms and options of financial aid available. After receiving the letter, the student can choose the way of subsidy they want, sign it and send it back to the school, and the school will provide the school subsidy according to the choice.
The tuition fee here generally includes one year of room and board, books, miscellaneous studies, transportation, etc. The family deductible money depends on the family’s financial situation, and generally the higher the individual or parent’s assets or income, the less the benefit will be. Those who do not meet the standard for full-time students will also receive only a partial subsidy.
4. As for the repayment options, here are a few different options to choose from:
- Repayment at 10% of disposable income for 20 years and 25 years for graduate students;
- 15% of disposable income (10% for loans after July 1, 2014) for 25 years (20 years for loans after July 1, 2014)
As of August, more than 43 million people in the United States are saddled with student loans, there are many people who still have not paid off their high loans after graduation and worked for more than ten years. In recent years, due to the epidemic and economic recession, many people have no income. Backing up loans has left many people or families unable to breathe. It is a good thing that college students currently have a favorable loan policy. In addition, they can manage their financial situation reasonably in daily expenses, such as using Personal Capital, or coupon sites like CouponBirds and Groupon to save money in time when shopping and reduce financial stress. If you need to apply for the latest student loan forgiveness program, you need to submit your application before December 31, 2023, but student loans taken out after June 30, 2023 will not be included in this forgiveness policy.
In addition, in order to better access higher education, students can also make themselves excellent, and do not need to consider tuition fees as a limitation when applying to colleges. Many top universities in the United States are willing to provide scholarships to outstanding students. You can study hard in the early stages of applying for a university, enrich yourself, better prepare your university application materials, improve your bargaining power and attractiveness, and then you can choose your favorite school without worrying too much about your studying cost. If you have already entered the university, the excellent academic performance in each semester can also be an advantage in applying for scholarships.