Questions and Answers: Applying for Student Loan Debt Relief

Not everyone needs to apply for a student loan forgiveness. Nearly 8 million federal borrowers will automatically receive relief because they are enrolled in an income-tested repayment plan; their income information is on file with the Ministry of Education.

All other borrowers will need to submit an application.

The Biden administration’s student loan forgiveness application promises to be a simple form, according to the Department of Education. Eligible borrowers hoping to see their loan balance drop to as low as $20,000 should submit an online application as soon as it becomes available.

To apply, for now, you will not need to upload documents to prove your income.

When does the application for student loan cancellation open?

Borrowers should expect the application for debt relief to be posted online in October, according to the Ministry of Education. You can sign up to be notified when the app opens on ed.gov/subscriptions.

If you want to make sure you receive relief before payments restart in January, you must submit your request by mid-November, according to the department.

The application period is open until December 31, 2023.

Who is eligible for student loan forgiveness?

There has been confusion over who is and is not eligible for the relief. Here is a reminder:

Those eligible for relief of up to $10,000:

  • For 2020 or 2021, your income must be less than $125,000 if filing individually or $250,000 if filing jointly.

  • Did not receive a Pell Fellowship while in college.

  • Have direct undergraduate loans; direct loans to graduates; PLUS parent loans; PLUS graduate loans; government-owned Perkins loans or government-owned loans under the Federal Family Education Loan Program, or FFELP.

  • Your loans must have been disbursed before June 30, 2022.

Those who qualify for relief of up to $20,000:

  • The above requirements except for not receiving a Pell Grant.

  • Only undergraduate debt is eligible for the additional $10,000 forgiveness.

Those ineligible for relief:

  • Have private student loans.

  • Have commercially held FFELP loans. However, those who applied to consolidate their debt before September 29, 2022 would qualify.

How to Opt Out of Student Debt Relief

Those who are eligible to automatically receive relief can choose to opt out. At this time, it is unclear how to withdraw, but the Ministry of Education should release more information on this.

Why would anyone withdraw from aid? Well, some borrowers object to the decision to cancel the debt. Others may be concerned about their personal tax implications. Although there is no federal tax on the relief, the reversed amount may be taxed as income by certain states, including Arkansas, California, Indiana, Minnesota, Mississippi, North Carolina and Wisconsin.

How will I know when the cancellation has taken place?

Expect to receive relief within six weeks, according to the Department of Education. You will be notified through your repairer. Monitor your loan account through your service agent or on studentaid.gov.

Why can’t I contact my repairer?

The Education Department handles and processes cancellation requests, not the company that services your loans.

You may have questions about the status of your canceled debt. If you call your repairer, you’ll be in a long line: millions of borrowers have changed repairers, expect upcoming refund, or adjust eligible payments for civil service loan forgiveness. Your only option? Wait on hold or wait for them to let you know.

What if I get a call about student debt relief?

Any unsolicited call you receive regarding the cancellation is likely a scam. The scams have been rampant since President Joe Biden announced the loan cancellation, according to the Federal Trade Commission. The Department of Education or your service agent will not call you to apply for debt relief. If you have any doubts about a call you receive, hang up and contact your repairer. If you have concerns about an unsolicited text message about canceling a student loan, do not respond. And never give your student financial aid ID, account number, or password to anyone.

What about all these lawsuits?

Multiple challenges to Biden’s executive order to cancel student debt have come out in recent weeks. Those targeting the nullification effort include state attorneys general as well as individuals and local associations backed by law firms. If any of the challenges are deemed viable, the cancellation may be delayed or discontinued.

While lawsuits are ongoing, the Biden administration has said it will not proceed with any cancellations until Oct. 17.

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