A million people qualify for federal student debt relief in NC. Here’s how to get it.
More than one million North Carolinians will save thousands of dollars or have their student loans eliminated under the Biden Administration’s new debt relief plan. Most of them were low-income students who had federal Pell grants in college.
The U.S. Department of Education estimates that 1,190,500 borrowers in North Carolina are eligible for the debt relief and 785,000 of them are eligible for up to $20k because they received Pell grants, according to a new state-by-state data analysis.
The plan focuses on getting relief for working and middle-class individuals. Nearly 90% of relief dollars will go to individuals earning less than $75,000 per year, according to the White House. Anyone in the top 5% of incomes in the country will not get the relief.
One of the plan’s goals is to help narrow the racial wealth gap because the majority of Black and Latino undergraduate borrowers are Pell grant recipients.
In North Carolina, the relief will help the younger generations of former college students because individuals 34 and younger make up the majority of borrowers with federal loan debt. And nearly half of North Carolinians with federal student loan debt have $20,000 or less in outstanding balances, U.S. Department of Education data shows.
Those borrowers will still have to pay state taxes on those forgiven loans, though Gov. Roy Cooper has asked state legislators to waive the state income taxes as they did with business loans.
How to get federal student loan relief
To be eligible for the student debt relief plan, individuals must earn under $125,000 annually and married couples or heads of households must earn under $250,000.
Most borrowers in North Carolina will be eligible for up to $20,000 in debt cancellation because they received a Pell grant, which are need-based grants for low-income students. Other borrowers will be eligible for up to $10,000 in debt cancellation.
The relief is capped at the amount of outstanding debt a person has and only applies to federal loans.
Some borrowers may be eligible to get the student loan relief automatically because the education department has their income data.
But most people will have to fill out an online application that’s expected to come out in early October. Borrowers sign up to get notified when the application is open through the Department of Education subscription page. (www.ed.gov/subscriptions)
It should take about 4-6 weeks to get the relief once the application is complete.
The department suggests that people apply before November 15 to receive relief before the payment pause expires on Dec. 31, 2022. But it will continue to process applications past that date.
This story was originally published September 20, 2022 at 3:54 PM.
