I have amazing breaking news!
Last week President Biden announced that Americans will have up to $10,000 of their federal student loan debt forgiven, and students that went to college on Pell grants will have up to $20,000 forgiven. Yes, they are just wiping this debt away!
So on this week’s Podcast, I explain who qualifies for these debt forgiveness programs, how many Americans will be impacted by them, and what it means for you!
After years of speculation and debate about the scope of the program, the Biden administration said they plan to forgive up to $10,000 in federal student loan debt for anyone who makes less than $125,000 a year…
And for borrowers who received Pell grants (which are government-provided student financial assistance), the administration will forgive up to $20,000.
So this is amazing news!
The administration also announced that the pause on Federal student loan payments, which was set to expire on August 31st, will actually be extended one final time.
The pause, which began in 2020, was part of an effort to assist borrowers through the pandemic, but it will come to an end on December 31st. And interest rates for those loans will remain at 0% until repayments begin next year.
How does this relate to us?
For most Americans, crippling educational debt has just been a fact of life.
Since the 1990 to 91 school year, the average tuition and fees at 4-year colleges and universities have more than DOUBLED.
Since 2007, Federal student loan debt has TRIPLED.
And in 2020, bachelor's degree earners from public and private nonprofit 4-year schools graduated with an average of $28,400 in student debt.
These student loan payments and their accompanying late fees devastated people's finances and really hurt the economy.
Federal Student Loan Debt forgiveness might be a debated political issue, but what’s not debatable is how it will impact borrowers and your customers.
For anyone struggling to pay off their educational debts, for any reason, student loan forgiveness means fewer monthly bills, higher credit scores, more financial freedom, larger savings accounts, better rates when applying for a loan, etc.
It will have a transformative effect on you and your clients.
Here’s what you need to remember…
According to federal data, about 43 million Americans have federal student loan debt…
Half owe less than $20,000…
And one-third owe less than $10,000…
So this means, at the very least, 14.3 million Americans will no longer have Federal Student loan debt as a result of this plan.
It just gets wiped away! So if you’re one of those 14.3 million, this is really good news.
For some people, that will mean immediate relief from bills, and for others, it will mean more money in their pocket to spend elsewhere.
In other words, everyone’s credit will be impacted differently…so this is a perfect time to explain to your clients what’s happening because many of them will have these student loans, and you can be the one to give them this great news! !
Here’s why this is important…
Your clients will probably think their credit scores will automatically improve when their student loans are forgiven.
But, when it comes to credit scores, some of your clients will see no change at all, and others might actually see a short-term drop.
Revolving payments, like student loan payments, when made on time, help build a positive credit history, and they benefit your score.
So when you pay off a student loan and close an account, you reduce the length of your credit history, which can cause a dip to your score temporarily.
In the short term, your clients will be losing a positive source of credit building. And they might need to be coached through this.
While it may seem like they were negatively impacted by the debt forgiveness plan, that’s definitely not the case.
The financial benefits of student loan forgiveness far outweigh the negatives.
Here’s what you need to know…
Your customers will probably want immediate answers to several questions.
I expect the first will be…
Do I qualify for forgiveness?
And the answer is…If you make less than $125,000 a year, yes, you qualify.
How do I apply for forgiveness?
The Biden administration hasn’t yet announced the details, but we expect more information in the coming days.
If you would like to be notified when the application process is open, please sign up at the Department of Education subscription page.
And we will continue to update you as the story unfolds.
The last two questions you should probably expect to hear are…
Will Private Loans be forgiven?
If I already paid off my loans, am I eligible for some form of relief?
The answer to both of those questions is, unfortunately, no.
This is just a Federal Student Loan forgiveness plan, which is an important reminder because although this is a giant step forward and will help many people, there’s still a ton of work to be done!
According to a press release from Equifax, the error occurred between March 17th and April 6th of this year, and “the issue was fixed on April 6th.”
I’ll end by saying…
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And If you’d like me to hold you by the hand as you launch your own credit repair business, check out our Credit Hero Challenge!
It’s an amazing program where you’ll learn the processes that have made millionaires, and it costs less than you'll spend taking your family to McDonald’s for dinner.
We’ve got another challenge starting in a few days, so grab your spot right now at CreditHeroChallenge.com!
Until then, remember, keep the facts on your side…
And keep changing lives!
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