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In just a few weeks, tens of millions of Americans will be able to apply for student loan forgiveness.
The US Department of Education has said the application will be ready in “early October.” Said your app it will be easyBut the federal student loan system is famously complicated.
As a result, experts say there are a number of steps you need to take now to prepare.
1. Calculate how much relief you may qualify for
President Joe Biden announced in August that most federal student loan borrowers will be eligible for forgiveness: up to $10,000 if they did not receive a Pell Grant, which is a type of aid available to low-income college students, and up to $20,000 if they did.
To find out if your college financial aid package included a Pell Grant, you can check your account at Studentaid.gov, in the “My Aid” section. Most of the recipients come from families with incomes of less than $60,000, said higher education expert Mark Kantrowitz.
The relief is also limited to individuals earning no more than $125,000 a year, or households earning less than $250,000.
The Department of Education will consider people’s so-called adjusted gross income or AGI, which may be different from their gross salary.
To confirm your AGI for 2020 and 2021, look for line 11 on the first page of your tax return, known as Form 1040.
If your income in either year fell below those limits, you should be fine.
2. Review your loan details
However, there are roughly 5 million borrowers with older student loans, known as Federal Family Education Loans (FFELs), which are actually with private companies rather than the government. (You can check your loan type on Studentaid.gov, again by going to the “My Aid” tab.)
The Education Department said it is working to make sure borrowers with these loans also get forgiveness, even though they don’t have the debt itself.
But if you have these loans and want to make sure you get forgiven as soon as possible, you may want to consolidate them into the main federal student loan program.
3. Contact your loan servicer (if necessary)
If you have questions for your trustee about forgiveness, reach out as soon as possible, experts say.
“Loan servicers are likely to be inundated with questions a few days before deadlines,” Kantrowitz said.
You’ll also want to make sure your administrator, as well as the Department of Education, have the latest contact information for you. You can ensure that the data is up to date in StudentAid.gov, Kantrowitz said.
This will ensure that you do not miss any important information about the forgiveness process.
Once the application is ready, apply for relief as soon as possible
The Education Department said that until the loan discharge application is ready, Borrowers can sign up on your website to receive updates.
Ideally, you’ll be ready to apply for relief as soon as the application starts, experts say.
Recent news that some Republicans may file a legal challenge against student loan forgiveness means relief could be in jeopardy. However, if you get your loans forgiven before a lawsuit gets in the way, you may be able to keep them, Kantrowitz said, “even if the courts rule against the Biden administration.”
Borrowers should try to apply for forgiveness no later than Nov. 15, Kantrowitz said.
That’s because the Department of Education says it will take up to six weeks for borrowers to get discharged after they apply, and it wants their balance reduced or eliminated before the federal student loan repayment pause expires. the pandemic era on December 31. .
“If forgiveness erases your debt completely, you can avoid having to make payments on your student loans,” Kantrowitz said.