On Wednesday, President Biden made a significant statement about the cancellation of up to $20,000 in student loan debt for millions of Americans. In fact, according to Mr. Biden, the new proposal would make over 20 million Americans eligible to have all of their debt forgiven.
“In exchange for a chance to at least try for a college degree, a whole generation is now burdened with unmanageable debt. Even if you graduate, the load is so great that you may not be able to enjoy the middle-class lifestyle that a college degree formerly gave, “The idea, which has an impact on the approximately 43 million people who have federal student loan debt, was described by Mr. Biden. Additionally, he extended the year-end payment freeze on student loans.
Private student loan debtors, who, according to a 2021 analysis from MeasureOne, make up an estimated 8% of all outstanding student loan debt in the U.S., are not covered by this loan forgiveness program. If you fit this description, you may want to look into additional cost-cutting measures including refinancing student loans. See what’s available from private lenders.
Here is how federal student loan holders may submit a debt relief application.
How to make a student debt forgiveness application
Make sure you genuinely qualify before you even think about asking for student debt forgiveness under the new Biden administration scheme. Here are the requirements that you must fulfill.
You are a borrower of federal student loans.
Neither you nor the members of your family make more than $125,000 annually.
You get Pell Grants, and the Department of Education is holding your loans (this is required for additional forgiveness)
Make sure to go through the options offered by private loan lenders if none of the aforementioned situations apply to you nor if you have a private student loan. If you want to save money in the long run, a student loan refinancing, which entails replacing your current loan with one that could have a better interest rate, might be a smart choice. Here is how to get going.
But if you tick the aforementioned requirements, you probably qualify for student debt forgiveness under this new program. You should make a reminder to submit an application for the forgiveness now that you are aware that you satisfy the requirements.
The Department of Education will provide you with an application to fill out, along with detailed instructions. Gather the necessary paperwork so you’ll be prepared when the application is made accessible. You’ll probably need to show that you fulfill the income requirements and have federal student loan debt.
The White House said in a statement that the application “will be available no later than when the pause on federal student loan repayments terminates at the end of the year,” adding that 8 million borrowers may be eligible for automatic relief because the Department of Education already has access to their financial records and income information.
The White House said, “Thanks to the American Rescue Plan, this debt relief will not be regarded as taxable income for federal income tax reasons.”
programs for forgiving student loans
The government already offers the following options that you may want to look into if you’re interested in getting your student loans canceled.
Loan forgiveness for teachers
Community Service Plans for Income-Driven Repayment (IDR) and Loan Forgiveness (PSLF)
the military
AmeriCorps
Federal Student Aid provides a list of the exact requirements and information needed to apply to each.