Millions of people should soon be able to cancel up to $20,000 in debt.
Millions of Americans are expected to be able to take the first steps toward cancelling up to $20,000 in debt under President Joe Biden’s federal student loan forgiveness application programme, a multibillion-dollar initiative lauded by supporters but already facing legal challenges.
The Biden administration announced in August that single borrowers earning less than $125,000 can qualify for $10,000 in federal school loan debt cancellation, while married borrowers earning less than $250,000 can qualify for the same amount (as calculated by gross adjusted income from 2020 or 2021).
Recipients of Pell grants, which are intended for people with “exceptional financial need,” according to the government, are eligible for an additional $10,000 in cancellation, for a total of $20,000 in cancellation.
Most of the 43 million federal student loan borrowers with debts totaling more than $500 billion will need to fill out an application to see if they are eligible for forgiveness. According to the White House, only about 8 million of those borrowers will have their debt automatically cancelled because the Department of Education already has their income information.
Late in September, the Biden administration quietly excluded some Perkins loan and Federal Family Education Loan borrowers (FFEL). Previously, both groups were eligible for loan cancellation. While approximately 4 million Americans have these loans, an administration official told ABC News that the change will affect only approximately 770,000 people.
During a briefing on September 26, White House press secretary Karine Jean-Pierre said there would be more updates on the application process “very soon.” Initially, the administration stated that the “simple process” would begin in early October. Later, officials told reporters that the app would be ready by the end of the month, but that it would be “easy” and “straightforward.”
Outside experts are more sceptical of the program’s success.
“When you look at the huge numbers that the administration anticipates will benefit from this initiative, it all depends on people being able to take these steps and have that debt relief applied to their account in a way that actually works,” said Mike Pierce, executive director of the Student Borrower Protection Center, an advocacy group.
key dates and details for applying for Student Loan Forgiveness Application
October: Student Loan forgiveness Applications are now available.
According to administration officials, applications for student loan cancellation will be available sometime in October, though a specific date has not yet been confirmed, and the original timeline of early October has been pushed back.
The department recommends that everyone apply, even those who may already be eligible for automatic forgiveness.
Borrowers should sign up at their subscription page to be notified when the process is officially open. (Private companies like Navient and Nelnet, which help manage loans and repayments, are also directing borrowers to a government portal designed to share student loan updates.)
It is unknown how many of the 43 million borrowers will apply. According to cost estimates, it could be as many as 75% of eligible people or as few as 50%.
“It will all depend on how well we spread the word about this opportunity and ensure that people raise their hands to get in line to have their debts cancelled,” Pierce said.
The recommended application deadline is November 15th.
DOE officials advise borrowers to apply for student loan forgiveness by November 15 in order to receive relief before the pandemic-era payment pause expires on December 31 and interest resumes accruing.
Forgiveness is expected to take four to six weeks, according to the department.
Student loan payments resume on January 1st.
Regular student loan payments will resume on January 1 following a three-year moratorium imposed by President Donald Trump at the start of COVID-19. If a borrower’s entire balance is not erased by the federal forgiveness programme, interest will resume on the remaining balance.
The programme application expires on December 31, 2023.
The deadline for applying for student loan forgiveness application is December 31, 2023.
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