In order to obtain approval for President Biden’s proposal to forgive up to $20,000 in student debts, millions of borrowers will need to fill out an application, which will likely be accessible within few weeks.
According to White House sources, the application will likely open in early October. Borrowers may take a few measures between now and then to ensure they are prepared to fill out the form when it goes online.
Because only certain forms of debt are covered by the plan, and certain borrowers will have access to larger forgiveness limits than others, experts advise consumers to understand their debts and eligibility before submitting an application. Melissa Byrne, executive director of WeThe45Million, an activist organization of borrowers who pushed for debt relief, said that even if you have everything set to apply, there may be technical issues since millions of borrowers would likely swarm the site when the application goes online.
Byrne said, “I’m certain that the Biden Administration is fully committed to providing assistance, but it’s a very complex system.” “Everyone desires immediate comfort.”
Here are five things you can do immediately to begin preparing your application.
Register for application alerts
Sign up for a notification from the Department of Education that will inform you when the application is available. This may be done on the subscription website for the Department of Education. Check the box labeled “NEW! Federal Student Loan Borrower Updates”
Byrne emphasized the importance of monitoring your email and spam filters for information from the Department of Education. “Be tethered to your email in case you get a message,” she advised.
Determine whether you’re a Pell Grant winner.
People who earned Pell Grants to finance their education are eligible for up to $20,000 in debt forgiveness, which is twice the $10,000 offered to everyone else.
Byrne remarked that some borrowers may be unaware whether they earned a Pell Grant, particularly if their parents completed the Free Application for Federal Student Aid (FAFSA) on their behalf. FAFSA is the application for financial assistance that is necessary to obtain loans, aid, and grants.
“Many individuals are unaware because their parents may have handled it when they were 17 or 18,” she said.
Visit StudentAid.gov and go into your Federal Student Aid account to check. On your dashboard, go to “My Aid” and then to the area for grants and loans, which contains the relevant information.
Determine if your loans are protected.
The Biden administration’s proposal includes federally owned loans, so you should determine whether your loans are eligible. Non-public student loans will not be repaid.
However, loans for parents, known as Parent PLUS loans, and loans for graduate students (so long as they are federal) are eligible.
Collect income data
The program is restricted to people with incomes of less than $125,000 and couples with incomes of less than $250,000.
According to the IRS, the program would utilize adjusted gross income, or AGI, which represents your actual income less certain adjustments such as student loan interest. You may locate this number on line 11 of your Form 1040 tax return.
Check your AGI for both 2020 and 2021, since the Biden administration has said that any year would be considered.
Byrne said, “Everyone should determine their AGI for those years; if it’s even a cent below $125,000 for people or $250,000 for married couples, you’ll qualify.”
November 15 should be circled on your calendar
The Department of Education advises debtors to apply for debt relief by November 15 in order to get it before the student loan payment moratorium expires on December 31.
The deadline to apply for debt forgiveness is December 31, 2023; however, the Department of Education states that it will continue to review applications as they are received, even after repayments start in January.
But if you want your January payments to reflect the loan reduction, you must apply by November 15.
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