Millions of borrowers will be asked to submit an application to be approved for President Biden’s offer to forgive up to $20,000 in student loans; this step will probably be made available within days.
The Department of Education announced on September 29 that the “short online application” will be available in October, however, it did not indicate exactly when the form would be made available. Borrowers can take a few actions in the interim to make sure they are ready to complete the form when it goes live.
Because the plan only applies to certain forms of debt and some borrowers will be able to access higher forgiveness limits than others, borrowers should make sure to understand their loans and what they qualify for before they fill out an application, experts say.
“I’m confident that the Biden Administration is 100% on it, to deliver relief, but it’s a very big system,” Byrne noted. “Everyone wants their relief right away.”
Borrowers should be aware of another potential barrier to Biden’s aid efforts: a legal challenge.
By October 12, according to Washington Post reporter Danielle Douglas-Gabriel for CBS News, a federal judge should rule on a lawsuit brought by six states with a Republican governor challenging Mr. Biden’s student debt scheme.
She stated that if the judge issues an injunction against Biden’s action, it “may produce a stall or halt to this policy.”
Here are 5 steps you can take now to prepare for the application.
Sign up for an application alert
First, register for a Department of Education alert that will notify you when the application becomes available. On the Department of Education’s subscription page, this is possible. The first box, called “NEW!! Federal Student Loan Borrower Updates,” should be checked.
Check whether you are a Pell Grant recipient
People who used Pell Grants to pay for their education are eligible for up to $20,000 in debt forgiveness, which is double the $10,000 available to everyone else.
Low-income students are eligible for Pell Grants, but Byrne pointed out that some borrowers would not be aware if they were awarded one, particularly if their parents submitted their Free Application for Federal Student Aid, or FAFSA, on their behalf.
The FAFSA financial assistance application is necessary in order to be eligible for loans, grants, and other forms of aid.
“There are a lot of people who don’t even know because their parents might have been handling it, and they were 17 or 18 years old,” she noted.
Determine if your loans are covered
You should confirm that your loans are eligible because the Biden administration’s plan includes federally-owned loans. Private student loans will not be forgiven as part of the program.
Additionally, the Biden administration recently revised its instructions to exclude some student loans from the eligibility for forgiveness, reversing previous policy in a significant way as the Department of Education completes plans to start accepting applications for debt relief.
Gather income data
The program is only available to people making less than $125,000 or married couples making less than $250,000 annually.
According to the IRS, the program would use adjusted gross income, or AGI, which is a number that reflects your gross income less certain deductions like student loan interest. That sum can be seen on line 11 of your tax return (Form 1040).
Check your AGI for 2020 and 2021, as the Biden administration has stated it will take either into considerations.
“Everyone should figure out what their AGI is for those years — even if it’s a penny below $125,000 for individuals or one penny below $250,000 for married couples, you’ll qualify, Byrne noted.
Mark November 15 on your calendar
the Department of Education is warning borrowers to submit their applications before November 15 to receive debt relief before the suspension of student loan payments expires on December 31.
Even if you miss the deadline to apply for loan forgiveness, the education department notes that it will still consider applications when repayments resume in January. The deadline to apply for loan forgiveness is December 31, 2023.
But submit your application before November 15 if you want to ensure that your payments reflect the loan relief that starts in January.