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For years, many students and former students have hoped for student loan forgiveness, and the time is finally here. The new student loan forgiveness program brought on by the Biden-Harris administration is pending, raising hopes – and confusion. Read this guide to understand how this new program might affect you and your finances.
There is a lot of confusion surrounding student loan forgiveness, and student loan companies are already feeling it. Navient, a major student loan provider, reported that their call volume has increased 8 times over due to the announcement of student loan forgiveness [1]. Unfortunately, these companies can not always answer the questions that their customers have.
Eligibility for student loan forgiveness is clearly written out. In order to be eligible, students must have federal student loans and make under $125,000 individually or $250,000 with a household. The initial qualification is for $10,000 in debt cancellation. However, those who received the Pell Grant can receive forgiveness for up to $20,000.
At this time, a court order has temporarily suspended debt discharge. However, it is believed that most students will have their debt discharged before January 1, 2023. Wait times, however, might last up to 6 months after the application process.
One area of confusion for student loan borrowers is the application process and whether or not it will be effective. Shockingly, current reports state that 1.3 million borrowers that are currently eligible for the existing public service loan forgiveness have not received forgiveness–making some wonder if there will be a similar delay with this new form of forgiveness [2].
Already, the Education Department is poised to forgive debts for an estimated 8 million borrowers automatically since they already have the loan and payment information on file [3]. However, it is advised to fill out the student loan forgiveness application before mid-November to ensure that everything is processed correctly unless you have been informed that your debts will be automatically forgiven [4].
Having the right information on having your debt canceled is very important. Current reports estimate that roughly $65 million ends up unused from government programs simply because people don’t know how to access the information to benefit from these resources [5]. The new student loan forgiveness program has the potential to benefit borrowers, but only if they stay informed. To stay up to date, you can find more information from the Education Department here.
There is plenty to gain from the cancellation of student loan debt for borrowers, with some cancellations offering relief and a fresh start for graduates. To ensure that you have the right information, continue to follow up on any potential changes that might influence your eligibility or when your loans will be forgiven. Even with the temporary pause on discharges, they are still accepting applications, so be sure to fill out the form as soon as possible!
[2] https://studentaid.gov/data-center/student/loan-forgiveness/pslf-data
[3] https://money.com/biden-student-loan-forgiveness-how-to-apply/
[4] https://studentaid.gov/debt-relief/application
[5] https://www.aecf.org/resources/improving-access-to-public-benefits
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