Education Secretary Miguel Cardona listens to President Joe Biden talk about student loan debt … [+]
The Biden administration is moving forward with its student loan forgiveness plan, and officials appear to be on track to issue a formal request within the next two weeks. Senior administration officials are stepping up outreach to borrowers and providing more details on how to apply and when to expect relief.
Here is the latest.
Up to $20,000 in student loan forgiveness under the Biden plan
Under a plan first announced last month, President Biden’s one-time student loan forgiveness initiative will allow up to 40 million federal borrowers to receive up to $20,000 in forgiveness. federal student loan.
Borrowers will be eligible for student loan forgiveness under Biden’s plan if they made less than $125,000 (or less than $250,000 if married) in 2020 or 2021. All federal student loans Government-held loans, including undergraduate, graduate, and Parent PLUS loans, are potentially eligible for relief.
New Student Loan Forgiveness Application Details
The Biden administration has indicated that while some relief will be granted automatically, most borrowers will need to submit an application, which will be available this month. Borrowers can also decline student loan forgiveness if they do not wish (i.e. to avoid potential state tax liability).
According to the Ministry of Education, the application for student loan forgiveness will be simple, short and easy to complete. No supporting documents will be required.
“In October, the U.S. Department of Education will launch a short online application for student debt relief,” the administration said in a mass email to borrowers. “You will not need to upload any supporting documents or use your FSA ID to submit your application.”
“We will send more details [to borrowers] over the next few days as we approach the application period,” Education Secretary Miguel Cardona said in a statement. recorded video message to borrowers.
When Will Borrowers Receive Student Loan Forgiveness
The Department of Education expects a four to six week processing time for student loan forgiveness applications. Applications will be considered on a rolling basis during the application period, which will run from October 2022 to December 31, 2023.
“Once you submit your application, we will review it, determine your eligibility for debt relief, and work with your loan officer(s) to process your relief,” the education department said in the e mass email to borrowers. “We will contact you if we need additional information from you.”
According to a court filing in a legal challenge brought by Republican states trying to block the student loan forgiveness plan, the Biden administration does not expect any student loan forgiveness approvals. before October 17, 2022. A preliminary hearing on that new lawsuit is scheduled for this week — and it’s possible that legal action will complicate the expected timeline for student loan forgiveness.
Biden administration changes loan eligibility for FFELP borrowers applying for student loan forgiveness
In response to new litigation challenging Biden’s student loan cancellation plan, the Department of Education abruptly changed eligibility rules last week to exclude certain corporate-held FFEL program loans (former loans issued in under the Federal Family Education Loan Program) relief. FFELP loans held by companies that have not yet been consolidated into a direct loan, or that have not been included in a request for direct loan consolidation before September 29, 2022, would not be covered.
Other FFELP loans, including defaulted FFELP loans and FFELP loans administered by the U.S. Department of Education, are still eligible for relief. The Biden administration has indicated it is exploring alternative avenues to provide relief to excluded borrowers.
Further Reading on Student Loans
In Reversal, Biden Administration Announces New Student Loan Forgiveness Eligibility Limits
5 key takeaways from the sudden change in student loan forgiveness eligibility
Biden’s student loan forgiveness could be taxable in some states
Millions of student borrowers to get payments back under Biden’s loan forgiveness initiative
