- Applications for cancellation of student debt will be available soon.
- Borrowers should start preparing to apply now to ensure there is no delay in obtaining debt relief.
- Some 8 million people will not have to do anything to get their debt cancelled. Find out if you are one.
Federal demands for student debt cancellation are about to drop, and you don’t want to be caught off guard.
People 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 loan debt forgiveness. Recipients of Pell Grants — typically given to low-income undergraduate students — can receive up to $20,000 in aid.
About 40 million borrowers are eligible for student debt relief, and about 20 million are expected to have their balances fully forgiven, according to the White House.
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 canceled before repayments resume in January.
When will the Student Debt Cancellation Application be available?
The federal government said beginning of October. On Friday, White House press secretary Karine Jean-Pierre said there was “no date set yet” for the release of the nomination form, but confirmed it would still be released. in October.
“We try to relieve ordinary Americans,” Jean-Pierre said.
Make sure you qualify for student debt cancellation
Only borrowers with federal loans are eligible for relief if their individual income is below $125,000 or $250,000 for households. Pell Grant recipients can get up to $20,000 cancellation and all others up to $10,000.
Public service workers (people working for the federal, state, local, tribal, military, or nonprofit organization) with at least 10 years of service (does not have to be consecutive.) may be eligible to have all of their debt forgiven.
The government recently changed the program requirements to allow more borrowers to qualify for the discount, but this is a limited time offer. Interested borrowers should apply by October 31 if they wish to take advantage of the temporary flexibility.
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A parent with parent PLUS loans for their child may be eligible for debt relief if they meet the income eligibility criteria.
Private loans are not eligible for any discount.
How do I know if I got a Pell Grant?
Create an account (an FSA ID) on StudentAid.gov or log in if you already have one. Make sure your contact details are correct. If you forgot your login information, use the Forgot Username or Forgot Password links or go to the tips page for help.
You are not required to have an FSA ID to apply for forgiveness, but it can be extremely useful. This is where, for example, you will find if you have received a Pell grant during your studies. It will also show your loan officer(s), the types of loans you have, and what you owe. (If you received a Pell Scholarship prior to 1994, this information will not show on StudentAid.gov, but you will still receive full benefits. The Department of Education maintains a record of each Pell Scholarship.)
The government will send you updates via email and SMS, so be sure to sign up for SMS alerts.
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Alert your loan manager
Make sure your loan manager has your most recent contact information so they can reach you. If you don’t know who your service agent is, you can log in to your StudentAid.gov account and see your service agent(s) in your account dashboard.
Your agent(s) will process the waiver and notify you when the waiver has been applied to your account. The White House says most borrowers will see the discount reflected in their accounts within six weeks.
If you have a balance left after forgiveness, your monthly payment will be recalculated based on your new balance, potentially reducing your monthly payment. Your loan servicer will let you know your new payment amount. The White House says borrowers must apply by mid-November to receive relief before the December 31 payment pause expires. However, the application window will remain open until 2023.
Complete and submit the application
The application for student debt relief is expected to be available this month. Once it’s ready, you should receive an email alerting you or you can continue to check 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 only online. A paper version will be available later.
As many as 8 million borrowers will get automatic forgiveness because the federal government already has their income and loan information — if they don’t opt out. The department uses the Free Application for Federal Student Aid (FAFSA) and income-based repayment application information to identify borrowers — or, if applicable, parents — who have submitted income data for the 2020 or 2021 taxation years.
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Can I get a refund of 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 a debt of $11,000 before March 13, 2020 and you paid it off at $9,000, you could receive a refund of $1,000.
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Which loans are eligible for forgiveness?
Federally held 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 loans held by the federal government have been contracted by June 30.
Last week, the Department of Education said borrowers with Federal Family Education Loans (FFELs) who are commercially held can no longer apply for debt relief by consolidating their loans in the FEL program. direct loans. But they will be eligible if the loans were consolidated before September 29.
Asked about FFEL borrowers who are no longer eligible for the program, Jean-Pierre said the goal has always been to provide relief to borrowers as quickly as possible.
“This change helps us achieve that,” she said.
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Is it real?
Several lawsuits claim that the loan cancellation plan is harmful or that the president is overstepping his authority. Any of them has the potential to stall or delay the plan.
Jean-Pierre said she couldn’t say if there would be any additional changes to the program that would further narrow the pool of eligible borrowers (and serve to circumvent a lawsuit).
She said it was “unfortunate” that some people in Republican states are making it harder to give “working Americans a bit of a break.”