In the upcoming weeks, petitions for student loan forgiveness may be available to tens of millions of Americans. Millions of Americans will receive financial relief as a result of President Joe Biden’s announcement that he will cancel $10,000 in federal student debt for the majority of students.
Fees up to $20,000 will be waived by Biden for Pell Grant holders. The White House estimates that about 20 million borrowers, or nearly 45% of all debtors, would have all of their debt completely forgiven.
By “early October”, there will be an application accessible from the U.S. Department of Education. Despite claims to the contrary, the federal student loan program is infamously difficult to navigate.
As a result, according to experts, there are a few preparations you should make right away.
Determine the amount of assistance you might be eligible for
President Joe Biden said that most people who have federal student loans will be qualified for some relief in August.
Depending on whether the borrower got a Pell Grant, a sort of financial help accessible to low-income undergraduate students, the amount of forgiveness will range from $10,000 to $20,000.
Check your account on Studentaid.gov can check if a Pell Grant was part of your financial assistance package for college under “My Aid”. According to higher education analyst Mark Kantrowitz, the majority of grantees came from families making less than $60,000.
Additionally, only those making less than $125,000 annually or $250,000 per household are eligible for the relief.
The so-called adjusted gross income, or AGI, which may be different from your actual wage, will be taken into account by the Education Department.
Your AGI for 2020 and 2021 can be found on line 11 on the front page of your tax return, commonly referred to as Form 1040.
You should be fine if your income in either year was below those ceilings.
Go over your loan information
The majority of federal student loans are eligible for cancellation.
However, 5 million borrowers have older student loans that are really held by private corporations, not the government, and are referred to as commercially held Federal Family Education Loans (FFEL). (Once more, at Studentaid.gov, click the “My Aid” page to find out what kind of loan you have.)
Even while it doesn’t hold the debt itself, the Education Department stated that it is trying to ensure that debtors with these loans receive the forgiveness as well.
However, you might want to consolidate them into the main federal student loan program if you have these loans and want to ensure that you’re eligible for forgiveness as soon as possible.
Speak with the loan servicer (if needed)
Contact your servicer as soon as you can if you have inquiries about forgiveness, according to experts.
A few days prior to the deadlines, Kantrowitz predicted that loan servicers would be deluged with inquiries.
Additionally, you should confirm that both the Education Department and your servicer have your most current contact details. At StudentAid.gov, you may verify that the information is current, according to Kantrowitz.
This will guarantee that you don’t overlook any crucial details about the forgiveness process.
Request relief as soon as the application is complete
According to the Education Department, borrowers can sign up for updates on its website until the application for loan cancellation is ready.
Experts advise that you should be prepared to submit a request for relief as soon as the application opens.
The recent reports that some Republicans may file a lawsuit to stop student loan forgiveness put the relief in doubt. However, if you receive loan forgiveness prior to a potential lawsuit, you might be able to keep it, according to Kantrowitz, “even if the courts find against the Biden administration.”
According to Kantrowitz, borrowers should try to submit their requests for forgiveness by November 15.
You want your amount to be reduced or canceled by the time the pandemic-era payment moratorium on federal student loans expires on December 31. The Education Department estimates that it could take borrowers up to six weeks to receive cancellation after they apply.
You won’t need to make any student loan payments if the forgiveness results in a total debt cancellation, according to Kantrowitz.