Approximately 1.4 million Michiganders eligible for relief, all borrowers have deferred payments until December 31, monthly payments could be cut in half 

Lansing, MI — On Aug 26th, Governor Gretchen Whitmer highlighted how Michiganders could benefit from the recent announcement on student loan forgiveness. In addition to the $10,000 in forgiveness for those earning less than $125,000 and $20,000 for Pell Grant recipients, there are other benefits Michiganders should be aware of, including an extension of the pause on payments for all borrowers through the end of the year, a new rule that could cut monthly payments in half, and enhanced eligibility for the Public Service Loan Forgiveness Program. 

“The recent announcement on student debt will save around 1.4 million Michiganders money, keeping money in their pockets that they can use to buy a home, get married, or start a family,” said Governor Whitmer. “There are several components to the recent announcement, and I encourage Michiganders to explore all the resources available to them. On top of the $10,000 in forgiveness for eligible Michiganders, there is an extension of the pause on repayment for all borrowers, a new income-based repayment plan cutting monthly bills in half, and more funds for Pell Grant recipients. I will work with anyone to keep lowering the cost of higher education and offering more paths for Michiganders to earn a higher education tuition-free, without going into debt in the first place.” 

Frequently Asked Questions 

For answers to frequently asked questions, visit: https://studentaid.gov/debt-relief-announcement/ 

Here are some highlights: 

Q: Do I need to do anything to extend my student loan pause through the end of the year? 

No. The pause will occur automatically. 

Q: Am I eligible for debt forgiveness? 

If your annual income is below $125,000 (for individuals) or $250,000 (for married couples or heads of households), you are eligible for up to $10,000 in debt forgiveness. 

If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt forgiveness.  

Q: What do I need to do in order to receive loan forgiveness? 

Nearly 8 million borrowers may be eligible for automatic relief because the U.S. Department of Education already has relevant income data.  

If the U.S. Department of Education does not have your income data, or if you do not know if they do, there will be a new website for you to find out in the coming weeks, before the pause on payments ends on December 31st. 

If you want to be notified when the new website with the application is open, sign up at the Department of Education’s subscription page: https://www.ed.gov/subscriptions 

Q: What about my monthly payment? 

The U.S. Department of Education will implement a new income-driven repayment plan to substantially reduce future monthly payments for lower- and middle-income borrowers. 

The rule would: 

- Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is down from the 10% available under the most recent income-driven repayment plan. 

- Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment. 

- Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less. 

- Cover the borrower's unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower's loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low. 

Reducing Debt for Michiganders 

30% of Michiganders with federal student loans, approximately 420,000 people, owe less than $10,000 and the recent announcement would forgive all of their debt.  

Around 50% of Michiganders with federal student debt, approximately 700,000 people, owe less than $20,000, and their debt would be cut in half or forgiven entirely. Nearly 700,000 more Michiganders will receive important loan relief.  

The pause on student loan repayment, interest, and collections for all Michigan borrowers has been extended through December 31, 2022. 

The new income-based repayment plan will ensure that borrowers pay no more than 5% of their discretionary monthly income on student loans, down from 10%. This will cut out of pocket costs by half, saving Michiganders hundreds of dollars a month. 

Public Service Loan Forgiveness Program 

The Public Service Loan Forgiveness (PSLF) offers loan forgiveness to those who work in public service including the military, qualifying non-profits, or federal, state, local, or tribal governments. After 10 years of public service employment and on-time payments, you can have your entire balance forgiven. 

As of June 2022, 6,120 Michiganders have had $358 million in loans forgiven under the PSLF. Over 148,000 more Michiganders may be eligible due to the recent PSLF waiver.  

The U.S. Department of Education has instituted temporary changes that provide more flexibility and make it easier than ever to have your debt forgiven under the PSLF. This includes allowing borrowers to receive credit for past periods of repayment that would otherwise not qualify for PSLF.  

However, these temporary changes end on October 31, 2022. Michiganders who work in public service should apply at: studentaid.gov/pslf/. 

Governor Whitmer’s Bipartisan Investments in Tuition-Free Higher Education 

Since taking office, Governor Whitmer has worked across the aisle to make college more affordable by expanding tuition-free higher education and skills training for Michiganders over 25, future educators, and talented young students pursuing a degree at public Michigan universities.  

She established and funded the bipartisan Michigan Reconnect program, which has put over 100,000 people on the path to tuition-free higher education or skills training. With the recent, bipartisan budget Governor Whitmer signed, Michigan funded $10,000 scholarships for 2,500 future Michigan educators every year and offered school districts funds for Grow Your Own Programs, helping districts train staff for teaching positions, tuition-free. She also expanded scholarships for young Michiganders pursuing higher education at one of the state’s public universities.