Cora Lewis and Adriana Morga | The Associated Press
NEW YORK — President Joe Biden’s Student Loan Forgiveness Program. It will cancel up to $20,000 of debt per borrower announced in August. The application process has now started and the administrator says it will take him five minutes to complete the form.
Borrowers who applied by mid-November will have until January 1, when loan payments are due to resume after the pandemic suspension, to be forgiven. Some Republican-led states have filed lawsuits to block the cancellation, but the Biden administration has said it is confident the challenge will not succeed.
The application method and other necessary information are as follows.
Who is eligible for student loan forgiveness?
If your loan is held by the Department of Education and your personal income is less than $125,000 or your family income is less than $250,000, you may be eligible for an exemption of up to $10,000. You can waive up to $20,000 if you receive a Pell grant reserved for undergraduates with the most significant financial need. If you are a current borrower and dependent student, you You are eligible for relief based on your parents’ income, not your own.
The big question remains what will happen to students with commercially held FFEL loans who have not refinanced by September 29th. The administration says it is looking for “additional legally available options to provide relief” to these borrowers, but nothing has been announced yet.
How do I apply for loan forgiveness?
go to studentaid.gov In the section on Student Loan Debt Relief,[今すぐ申し込む]Click.
Be prepared to enter your basic personal information. The form asks for his name, social security number, date of birth, phone number, email and his address. No income or student loan documentation is required.
Then check the eligibility rules and make sure they match. For most people, this means proving that your annual income is less than her $125,000, or your household income is less than her $250,000. If you meet the eligibility rules, click the box to confirm that everything you entered is correct.
How long does it take to receive forgiveness?
After the form is submitted, the Biden administration has said it will take four to six weeks to process. The Department of Education will use existing records to verify loan eligibility and look for applicants who may exceed the income limit. Some people are asked to submit additional documents to prove their income. The Department of Education estimates that the verification application takes approximately 30 minutes, including time to review and upload tax documents.
Most borrowers who applied by mid-November should expect their debts to be canceled by January 1, when federal student loan payments are expected to resume after a pause during the pandemic.
Are Student Loan Forgiveness Guaranteed?
Things could get even more complicated depending on the outcome of some legal challenges. The Biden administration is facing a growing number of lawsuits to block the program, including lawsuits filed by her six Republican-led states.
A federal judge in St. Louis is now considering the state’s request for an injunction to stop the plans. Biden said on Monday he was confident the lawsuit would not overturn the plan. increase.”
Has the student loan payment freeze been extended?
The payment freeze was finally extended until December 31st. The freeze started in 2020 as a way to help those struggling financially during the COVID-19 pandemic and has since been extended several times. It was set to expire on August 31st.
The interest rate is 0% until the repayment starts. Under the previous extension announced in April, people who were behind on their payments before the pandemic would automatically be put on good standing.
Are Graduate Student Loans Eligible?
Yes, federal student loans taken to cover a graduate degree are eligible for forgiveness.
What if my student loan balance includes a large amount of interest?
Interest itself is considered part of the balance for the purposes of this program. Forgiveness will deduct $10,000 from the total balance you owe.
Do I have to pay tax on the exempt amount?
At least some states, including Indiana and Mississippi, have said they have plans to tax the exemption, and several others are changing their tax rules to exclude exempt student debt. It is unclear whether Congress previously eliminated the tax on loan forgiveness through 2025.
Are Parents Plus Loans Eligible?
The Parent Plus loan is included in the Waived Plan, subject to the same $250,000 family income cap that applies to remaining cancellations.
Parents Plus loans are different from other federal education loans in that they can cover non-tuition costs, such as books and college room and board costs. As of March 2022, parents of 3.6 million students owe her more than $107 billion in Parent Plus loans, according to the Department of Education. This represents about 6% of all federal student loans held by Americans.
If a parent received a Parent Plus loan on behalf of a student and the same student received the loan directly, both receive relief because cancellation is per borrower, not per student. In other words, each person who has a federal student loan held by the Department of Education and meets the income requirements is eligible for cancellation.
What is a PELL GRANT?
About 27 million borrowers eligible for Pell’s grant are eligible for waivers of up to $20,000 under Biden’s plan.
The Pell Grant is a special government scholarship for low-income Americans that can currently receive up to $6,895 annually for about six years.
According to the Department of Education, nearly all Pell grant recipients come from households earning less than $60,000 a year, and Pell grant recipients typically have more trouble paying off debt than other borrowers. said to have experienced
Pell grants themselves usually don’t have to be repaid, but recipients usually take out additional student loans.
“This additional relief for Pell borrowers is also an important part of racial equality in cancellations,” said Kat Welbeck, a civil rights attorney at the Center for Student Borrower Protection. Racial wealth disparities make it more likely that students of color, especially black and Latino, come from low-income households, have student debt, and take on large amounts of debt because they exacerbate I mean.”
To find out if you have received a Pell grant, please check the email you receive regarding the FAFSA award.
How many people will this help?
About 43 million Americans have federal student loans with an average balance of $37,667, according to federal data. His one-third of them are less than his $10,000 in debt. Half he owes less than $20,000. Total federal student debt exceeds $1.6 trillion.
I’ve already paid off my student loans — is there any relief?
According to the Federal Office of Student Aids, if you voluntarily made payments after March 2020 when payments were suspended, you can request a refund for those payments. Please contact your loan servicer to request a refund.
What repayment plan does the Department of Education suggest?
The Ministry of Education has proposed a repayment plan that limits monthly payments to no more than 5% of the borrower’s disposable income, down from the current 10%. The borrower, if approved, will have to apply for a repayment plan, which could take him a year or more.
For example, according to a government press release, the proposal would result in one borrower with an annual income of $38,000 paying $31 per month.
The amount considered non-disposable income will also increase, but the department has not disclosed how much.
Discretionary income usually refers to what is left over after covering necessities such as food and rent, but for student loan repayment purposes, the difference between the borrower’s annual income and the federal poverty line, family size and geographic location. .
“The difficulty with income-based repayments is that they don’t take into account other liabilities, such as rent payments,” says Kristen Arlenius, a financial counselor at Your Money Line, which offers financial literacy training. said. “If someone’s living expenses are their salary, and their rent is half their salary, and their car payment is the rest, they have to make a choice. Not considered, but he’s one of the options.”
Student Debt Relief provides calculators to help you determine your disposable income.
What if I have a loan forgiveness but can’t afford to pay?
Once payments are resumed, the non-paying borrower risks delinquency and ultimately default. It could impair your credit rating and mean you are not eligible for additional assistance.
If you’re struggling to pay, see if you qualify for an income-driven repayment plan. Learn more about.
Biden’s plan also includes a proposal to allow people with undergraduate loans to cap their repayments at 5% of their monthly income. It’s not clear what the details will be.
If you have worked for a government agency or non-profit organization, you may also be eligible for the Public Service Loan Forgiveness Program. Learn more about.
Collin Binkley contributed to this report from Washington.
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https://www.mercurynews.com/2022/10/19/everything-to-know-to-apply-for-student-loan-forgiveness/ Everything You Need to Know to Apply for President Biden’s Student Loan Forgiveness Program