The big student loan forgiveness program is something a lot of you have questions about. I’m answering a few of the top questions we are getting about the new program. There are things you can do now to prepare for when the application window opens up.
- Question: What is the student loan forgiveness program?
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Answer: The White House has said the application to apply for student loan forgiveness should be available at the beginning of October. Most borrowers will qualify for a $10,000 break in federal student debt and up to $20,000 for Pell grants. That is if you don’t make more than $125,000 a year or no more than $250-thousand for married couples.
- Question: What does “up to” $20,000 mean?
Answer: Your relief is capped at the amount of your outstanding debt.
For example: If you are eligible for $20,000 in debt relief, but have a balance of $15,000 remaining, you will only receive $15,000 in relief.
- Question: How do I know if I qualify for student debt relief?
Answer: Log in to your account on StudentAid.gov and make sure your contact info is up to date. You can get updates by both email and text message, so make sure to sign up to receive text alerts. If it’s been a while since you’ve logged in, or you can’t remember if you have an account username and password (FSA ID), they do have tips to help you access your account.
If you don’t have a StudentAid.gov account (FSA ID), you should create an account to help you manage your loans. Make sure your loan servicer has your most current contact information so they can reach you. If you don’t know who your servicer is, you can log in and see your servicer(s) in your account dashboard.
Take a screenshot of your current student loan balance so you can check it later.
And you can also print your loan records and tax returns, so you have those handy.
- Question: How long do you have to wait for relief once you apply?
Answer: “October 1, they’re going to launch they’re calling it just application essentially matching your social security number, name and a tax bracket to ensure are you qualify? And they’re estimating between four to six weeks to completely eliminate the loan from your balance,” said Andrea Robayo, The College Money Guys.
- Question: Can you get money back even though you’ve paid toward your student loan?
Answer: You may know, that there has been a student loan payment pause since 2020. If you have been paying on your loans during that time you should be able to get some of that money back as long as you have not paid off the loan completely.
- Question: I heard I don’t have to apply and it will happen automatically. Is this true?
Answer: If the U.S. Department of Education doesn’t have your income data, the Administration will launch a simple application which will be available by early October.
If you would like to be notified when the application is open, you can sign up at the Department of Education subscription page.
Once a borrower completes the application, they can expect relief within 4-6 weeks.
The government encourages everyone who is eligible to file the application. They do say there are 8 million people for whom they have data and who will get the relief automatically.
- Question: What is the deadline to apply for student loan forgiveness?
Answer: Borrowers are advised to apply before November 15th in order to receive relief before the payment pause expires on December 31, 2022.
The Department of Education will continue to process applications as they are received, even after the pause expires on December 31, 2022.
- Question: Are defaulted loans eligible for debt relief?
Answer: Yes, defaulted loans are eligible for debt relief. If you have a remaining balance on your defaulted loan(s) after relief is applied, consider getting or staying out of default through the Fresh Start initiative.
- Question: What other programs offer loan forgiveness?
Answer: Borrowers who are employed by non-profits, the military, or federal, state, Tribal, or local government may be eligible to have all of their student loans forgiven through the Public Service Loan Forgiveness (PSLF) program. This is because of time-limited changes that waive certain eligibility criteria in the PSLF program. These temporary changes expire on October 31, 2022. For more information on eligibility and requirements, go to PSLF.gov.
Free help figuring out the student loan application
There is free help navigating all of this if you need it. A student loan ombudsman can help or you can call the Department of Education directly.
“You do get someone from the department of education, answering your questions, specifically who are trained solely on the FAFSA on the loans.
(Additional FAQ about the loan forgiveness program.)
Beware of loan forgiveness scammers!
Here’s a warning from the government about this new program: You might be contacted by a company saying they will help you get loan discharge, forgiveness, cancellation, or debt relief for a fee. You never have to pay for help with your federal student aid. Make sure you work only with ED and our trusted partners, and never reveal your personal information or account password to anyone. Our emails to borrowers come from noreply@studentaid.gov.
On this week’s Ask Amy podcast, hear more from The College Money Guys about the new loan forgiveness program. They are also experts on how to save your family money when signing up for college.