What is the meaning of debt forgiveness?
What is debt forgiveness? Debt forgiveness happens when a lender forgives either all or some of a borrower's outstanding balance on their loan or credit account. For a creditor to erase a portion of the debt or the entirety of debt owed, typically the borrower must qualify for a special program.
How do you qualify for debt forgiveness?
The White House announced that single borrowers earning less than $125,000 per year, or households earning less than $250,000, are eligible for $10,000 in loan forgiveness. Borrowers who fall under the income caps and received Pell Grants in college will receive an extra $10,000 – totaling $20,000 in forgiveness.
What happens when your loans are forgiven?
If you qualify for forgiveness of the full amount of your loan(s), you won't have to make any more loan payments. If you qualify for forgiveness of only a portion of your loan(s), you're still responsible for repaying the remaining balance.