One-time student loan forgiveness could reach millions of borrowers by the end of this year. And some may be able to take advantage of student loan relief eligibility immediately.
This year, President Biden announced that Pell Grant recipients who earn less than $125,000 per year will receive up to $20,000 in student loan forgiveness, while other federal borrowers with the same income limit can get up to $10,000 relief.
The US Education Department estimates that approximately eight million federal borrowers will automatically be eligible for a student loan forgiveness 2022 extension without additional actions. Here’s how to check whether the latest student loan forgiveness rules apply to you as well.
Check if the Loan Forgiveness Applies to You
You’ll be eligible for forgiveness if your income was less than $125,000 in 2020 and 2021, or if you are married and your combined earnings are below $250,000. The only thing left to check is your adjusted gross income (AGI) on your tax returns for the last two years.
Pell Grant recipients can receive $20,000 in debt forgiveness, while holders of federal loans up to $10,000 will be eligible. Eligible federal student loans include undergraduate, graduate, and spousal loans.
Forgiveness does not apply per loan but per borrower. This means that even if you have multiple federal loans, the forgiveness limit is $10,000 or $20,000. Pell Grant recipients who received one Pell Grant and other federal loans are still eligible to receive the full $20,000 in forgiveness, even though their grant was less than that amount.
Check Whether You Need to Fill Out an Application
To receive loan forgiveness, the vast majority of borrowers will have to complete an application. This includes approximately six million students who submitted the Free Application for Federal Student Aid (FAFSA). Another two million borrowers have income-driven repayment plans and have submitted income information for 2020 and 2021. The Department of Education will notify borrowers who are eligible.
Receive Updates From the Department of Education
Make sure you register for Education Department updates to ensure you are notified when the application goes live. Enter your email address to receive Federal Student Loan Borrower updates.
Next, verify with your loan servicer your current contact information. You can find out who your loan servicer might be by visiting the Federal Student Aid website.
Gather Your Tax Returns
The student loan forgiveness eligibility application requires borrowers to have 2020 and 2021 tax returns in order to determine their eligibility. So, having these documents on hand is a good idea.
Private Loans Do Not Qualify
Private loans, such as Federal Family Education Loans (FFELs), that are backed governmentally but were held originally by private companies, do not qualify for relief.
Payments Made During the Pandemic Might Be Returned
All payments made during the pandemic suspension qualify for refunds or forgiveness. The department stated that in some cases refunds are automatic. Borrowers who apply for student loan forgiveness and are approved will receive a refund of the amount they have paid. This is if the payments brought down your debt below the maximum amount you can receive, but not enough to pay off your loan fully.
Other Forgiveness Programs and Repayments Options Are Available
Borrowers have other options than the one-time loan forgiveness program. The Department of Education announced last October a one-time expansion of the eligibility for public service loan forgiveness. You can find information about the program on the student aid website.
To correct past errors in eligibility and counting, the department will also undergo an adjustment to income-driven repayment plans. The adjustment takes place automatically, so there is no need to apply. Only direct loans are available to borrowers.
The Bottom Line
The student loan forgiveness program will lift a huge burden off the shoulders of those students who struggle. Check if the program supports you as well, in order to immediately close a debt that would normally take you around 10-30 years to repay. Refer to this post if you’re still struggling to find out whether you qualify for student loan forgiveness eligibility.
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As you said in the article, Biden backed off the forgiveness of those private FFEL loans. I’m betting eventually none of these loans will be forgiven because his decree was unconstitutional.
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