Polina Lebed | Istock | Getty Images
In just a few weeks, tens of millions of Americans may be able to apply for student loan forgiveness.
The US Department of Education said an application would be ready “early October”. He said his app will be easybut the federal student loan system is notoriously complicated.
As a result, experts say there are a number of steps you should take now to prepare.
1. Determine the amount of relief you may be entitled to
President Joe Biden announced in August that most federal student loan borrowers will be eligible for some remission: up to $10,000 if they don’t receive a Pell Grant, which is a type of assistance available to low-income undergraduate students, and up to $20,000 if they did.
To find out if your college financial aid package included a Pell grant, you can check your account on Studentaid.gov under the “My Aid” section. Most recipients come from families with incomes below $60,000, said higher education expert Mark Kantrowitz.
Relief is also limited to individuals earning no more than $125,000 per year or households earning less than $250,000.
The Department of Education will take into account the so-called Adjusted Gross Income, or AGI, which may be different from your gross salary.
To confirm your AGI for 2020 and 2021, find line 11 on the first page of your tax return, known as Form 1040.
If your income in either year has fallen below these caps, you should be good.
2. Check your loan details
However, there are about 5 million borrowers with older student loans, known as Federal Family Education Loans (FFEL), which are actually held by private companies rather than the government. (You can check your loan type on Studentaid.gov, again, by going to the “My Help” tab.)
The Department of Education said it is working to ensure that borrowers with these loans also get the forgiveness, even if it does not hold the debt itself.
But if you have these loans and want to make sure you’re included in the forgiveness as soon as possible, you might want to consolidate them into the main federal student loan program.
3. Contact your loan manager (if necessary)
If you have questions for your repairman about forgiveness, contact them as soon as possible, experts say.
“Loan servicers are likely to be inundated with questions starting days before maturities,” Kantrowitz said.
You’ll also want to make sure your repairer, as well as the education department, has the most up-to-date contact information for you. You can ensure that the data is up-to-date at StudentAid.gov, Kantrowitz said.
This will ensure that you don’t miss any important information about the forgiveness process.
Once the application is in place, seek relief as soon as possible
The Ministry of Education said until the loan cancellation application is ready, borrowers can register on its website for updates.
Ideally, you’ll be ready to ask for help as soon as you launch the app, experts say.
Recent news that some Republicans may be taking legal action against student loan forgiveness means the relief could be in jeopardy. If you get your loans canceled before a lawsuit gets in your way, you might be able to keep it, Kantrowitz said, “even if the courts rule against the Biden administration.”
Borrowers should aim to apply for a forgiveness no later than Nov. 15, Kantrowitz said.
That’s because the Department of Education says it will take up to about six weeks for borrowers to get a cancellation after they apply, and you want your balance reduced or eliminated by the time the payment breaks. of the pandemic era on federal student loans expires on December 31. .
“If the forgiveness results in your debt being wiped out completely, you can avoid having to make payments on your student loans,” Kantrowitz said.