In order to obtain approval for President Biden’s plan 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 can 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 higher forgiveness limits than others, experts advise borrowers to understand their loans and eligibility before submitting an application. Melissa Byrne, executive director of WeThe45Million, an activist group of borrowers who lobbied for debt relief, stated that even if you have everything set to apply, there may be technical issues because millions of borrowers will likely swarm the site when the application goes online.
Byrne remarked, “I’m certain that the Biden Administration is fully committed to providing assistance, but it’s a very complex system.” “Everyone desires immediate relief.”
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 can 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 receive a message,” she advised.
Determine if 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 double the $10,000 available to everyone else.
Byrne remarked that some borrowers may be unaware if 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 aid that is required to receive loans, aid, and grants.
“Many people 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, navigate to “My Aid” and then to the section for grants and loans, which contains the relevant information.
Determine whether your loans are protected.
The Biden administration’s plan includes federally owned loans, so you should determine if your loans are eligible. Non-public student loans will not be forgiven.
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 minus certain adjustments such as student loan interest. You can find this number on line 11 of your Form 1040 tax return.
Check your AGI for both 2020 and 2021, as the Biden administration has stated that either year will be considered.
Byrne stated, “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 receive it before the student loan payment moratorium expires on December 31.
The deadline to apply for loan forgiveness is December 31, 2023; however, the Department of Education states that it will continue to process applications as they are received, even after repayments resume in January.
But if you want your January payments to reflect the loan relief, you must apply before November 15.
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