PresidentEliminating up to $20,000 in student loans would require millions of borrowers to fill out an application to gain approval, a move that will likely be available within days.
The application will open in October, which will be a “short online application”, the education department said on September 29, though it did not specify when the form would go live. In the meantime, borrowers can take some steps to ensure that they are ready to fill out the form when it goes live.
Because only certain types of loans are covered by the plan — and some borrowers will be able to tap a higher forgiveness limit than others — borrowers should make sure they understand their loan and what they qualify for before filling out an application. Yes, experts say. Even if you have everything ready to apply, technical glitches can happen as it is likely that millions of borrowers will flood the site when the application goes live, said Melissa Byrne, executive director of WeThe45Million. Said, an active group of borrowers lobbying for debt relief .
“I believe the Biden administration is 100% on this to provide relief, but it’s a huge system,” Byrne said. “Everyone wants their relief immediately.”
There’s also a potential hurdle in Biden’s relief effort that borrowers should keep an eye on: a legal challenge.
A federal judge is expected to rule on the lawsuit against Mr Biden’s student loan scheme12, Washington Post reporter Danielle Douglas-Gabriel told CBS News. If the judge imposes an injunction on Biden’s move, it “could prevent or stop this policy,” she said.
The lawsuit, filed in September by attorneys general in Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina, argues that taxpayers should not be saddled with paying the debts of other Americans who chose to go to college and can no longer repay. their debts.
“Everyone is looking forward to next week to see what comes out of that case,” Douglas-Gabriel said.
In the meantime, here are 5 steps you can take now to prepare for the application.
Sign up for App Alerts
First, sign up for alerts from the Department of Education that will let you know when the application will go live. This can be done on the Department of Education membership page. Check the first box called “NEW!! Federal Student Loan Borrower Update.”
Don’t forget to monitor your email and spam filters for updates from the Department of Education, Bayern said. “If you get a communication, be chained to your inbox,” she said.
Check if you are a Pell Grant recipient
Those who have received a Pell grant for their education can receive up to $20,000 in debt relief—double the $10,000 in forgiveness available to everyone else.
Pell grants are offered to low-income students, but Byrne said some borrowers may not know they’ve received one, especially if their parents have paid for federal student aid, or FAFSA, for them. Fee Application is filled. FAFSA is the financial aid application that is required to obtain loans, financial aid and grants.
“There are a lot of people who don’t even know because their parents must have been handling it, and they were 17 or 18,” she said.
To check, visit StudentAid.gov and log in to your Federal Student Aid account. On your dashboard, look for “My Aid” and then the section for Grants and Loans, which will provide the data.
Determine if your loans are covered
The Biden administration’s plan covers federally held loans, which means you should check that your loans qualify. Will not be part of private student loan forgiveness.
And the Biden administration recently changed its guidance to eliminate some student loans from being eligible for forgiveness, a major reversal as the Education Department makes final preparations to launch debt relief applications.
Beginning September 29, borrowers with student loans through the Federal Family Education Loan (FFEL) program and Perkins Loans, who have not already consolidated their loans into direct loans, will no longer be able to do so and are now entitled to federal debt relief. are not eligible for. , the education department now says.
Those events, although federally guaranteed, are organized by private institutions. Borrowers with FFEL and Perkins loans who applied to consolidate into the Direct Loan program before Thursday will still be eligible for debt relief.
collect income data
This program is limited to individuals earning less than $125,000 or married couples earning less than $250,000.
The program will use adjusted gross income, or AGI, which is a figure that reflects your gross income minus certain adjustments, such as student loan interest, according to the IRS. You can find that figure on line 11 on your tax return (Form 1040).
Check your AGI for both 2020 and 2021, as the Biden administration said it would consider either year.
“Everyone should find out what their AGI is for those years—even if it’s a penny of less than $125,000 for individuals or less than $250,000 for married couples, you’ll qualify, says Byrne. he said.
Mark November 15th on your calendar
The Department of Education is alerting borrowers to apply before November 15 to get debt relief before the student loan payment break ends on December 31.
If you don’t apply by then, everything’s not over: The deadline to apply for loan forgiveness is December 31, 2023, and the Department of Education notes that even after repayment resumes in January, it’s Will continue to process the applications received. ,
But if you want to be sure that your payments reflect debt relief starting in January, apply before November 15.