- Applications for student debt forgiveness will be available soon.
- Borrowers should start preparing now to apply to ensure there is no delay in debt relief.
- About 8 million people will not have to do anything to cancel their debt. Find out if you are one.
On your marks, get ready.
Applications for federal student debt forgiveness are about to drop, and you don’t want to be caught flat-footed.
Individuals who earned $125,000 or less (or $250,000 for households) in 2020 or 2021 are eligible for at least $10,000 in federal student debt forgiveness. Recipients of Pell Grants, which are generally awarded to undergraduate students, can receive up to $20,000 in relief.
About 40 million borrowers are eligible for some student debt relief, with about 20 million expected to have their entire balance written off, the White House says.
If you’re one of the lucky ones, here’s what you need to do to make sure some or all of your debt is forgiven before payments resume in January.
When will the student debt forgiveness application be released?
The federal government has said early October On Friday, White House press secretary Karine Jean-Pierre said there was “no set date yet” for the release of the application form, but confirmed it would still be released in October.
“We’re trying to bring relief to everyday Americans,” Jean-Pierre said.
Make sure you qualify for student debt forgiveness
Only borrowers with federal loans are eligible for relief if their individual income is less than $125,000 or $250,000 for households. Pell Grant recipients can get up to $20,000 written off and everyone else up to $10,000.
Public service workers (people who work for federal, state, local, tribal, military, or a nonprofit organization) with at least 10 years of service (not necessarily consecutive) may be eligible to have all of their debt canceled
The government recently changed the program’s requirements to allow more borrowers to qualify for forgiveness, but it’s a limited-time offer. Interested borrowers must apply by October 31 if they wish to take advantage of the time flexibility.
Do you want to forgive the student loan?:Millions of jobs qualify for the updated program, and yours could be one of them.
A parent with PLUS Parent Loans for their child can qualify for debt relief if they meet the income eligibility criteria.
Private loans are not eligible for any forgiveness.
How do I know if I had a Pell grant?
Create an account (an FSA ID) at StudentAid.gov or sign in if you already have one. Make sure your contact information is accurate. If you have forgotten your login information, please use the Forgot my username or Forgot my password links or go to the tips page for help.
You don’t need to have an FSA ID to apply for forgiveness, but it can be very helpful. This is where, for example, you’ll find if you’ve received a Pell Grant while in college. It will also show you your loan managers, the types of loans you have and what you owe. (If you received a Pell Grant before 1994, this information will not show on StudentAid.gov, but you will still receive the full benefit. The Department of Education maintains a record of each Pell Grant.)
The government will send you updates via email and text, so be sure to sign up for text alerts.
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Notify your loan officer
Make sure your loan officer has your most current contact information so they can contact you. If you don’t know who your administrator is, you can log into your StudentAid.gov account and see your administrators on your account dashboard.
Your administrator will process the relief and notify you when the relief has been applied to your account. The White House says most borrowers will see the forgiveness reflected in their accounts within six weeks.
If you still have a balance after debt forgiveness, your monthly payment will be recalculated based on your new balance, which could lower your monthly payment. Your loan officer will let you know what your new payment is. The White House says borrowers should apply by mid-November to receive relief before the payment break expires on Dec. 31. However, the application window will remain open until 2023.
Fill out and submit the application
The student debt relief application is expected to be available this month. Once it’s ready, you should receive an email notifying you, or you can keep checking StudentAid.gov for updates.
Borrowers will not need to upload any documentation or have an FSA ID to submit their application. Initially, the application will be available online only. A paper version will be available later.
Up to 8 million borrowers will receive automatic forgiveness because the federal government already has their income and loan information, if they don’t turn it off. The Department uses the Free Application for Federal Student Aid (FAFSA) and income-based repayment application information to identify those borrowers (or, where applicable, parents) who have submitted income for fiscal years 2020 or 2021.
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Too:‘Excessive’: Sen. Joe Manchin slams Biden’s student loan forgiveness plan as too much
Can I get a refund for past student loan payments?
Yes, borrowers may be eligible for repayments, but only if they made payments during the pandemic that brought their balance below the relief they would be eligible for. So if you had $11,000 in debt before March 13, 2020, and you pay it down to $9,000, you could get a $1,000 refund.
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Which loans are eligible for forgiveness?
Federally subsidized loans, unsubsidized loans, Parent PLUS Loans and Graduate PLUS Loans are eligible. Consolidated loans are also eligible for relief as long as all combined federally held loans were taken out on or before June 30.
Last week, the Department of Education said borrowers with commercially maintained Federal Family Education Loans (FFELs) can no longer apply for debt relief by consolidating their loans into the Direct Loan Program . But they will be eligible if the loans were consolidated before September 29.
When asked about FFEL borrowers who no longer qualify for the program, Jean-Pierre said the goal has always been to get borrowers help as quickly as possible.
“This change helps us achieve that,” he said.
Apologizing:Do you have student debt? Here are ways to get loan forgiveness under the new federal rules
It is complicated:Student loan forgiveness reality check: Red tape hurdles and legal challenges could complicate relief
Is this for real?
Several lawsuits claim the loan forgiveness plan is harmful or that the president is overstepping his authority. Any of these have the potential to block or delay the plan.
Jean-Pierre said he could not say whether there would be additional changes to the program that would further favor the pool of eligible borrowers (and serve to stave off a lawsuit).
She said it was “unfortunate” that some people in Republican states were making it harder to give “working Americans some breathing room.”