How to prepare for student loan forgiveness, so you can apply as quickly as possible
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In just a few weeks, tens of millions of Americans may be able to apply for student loan forgiveness.
The US Department of Education said the application will be ready by “early October.” She said apply it It will be simpleThe federal student loan system, however, is notoriously complex.
As a result, experts say there are a number of steps you should take now to prepare.
1. Find out how much rest you may qualify for
President Joe Biden announced in August that most federal student loan borrowers would be eligible for some forgiveness: up to $10,000 if they did not receive a Pell Scholarship, a type of assistance available to low-income undergraduate students, and up to $20,000. If they do.
To see if your college financial aid package includes a Pell Grant, you can check your Studentaid.gov account, under the “My Aid” section. Higher education expert Mark Kantrowitz said most recipients come from families earning less than $60,000.
The exemption is also limited to individuals whose income is no more than $125,000 a year, or families who earn less than $250,000.
The Department of Education will consider what is called your Adjusted Gross Individual Income, or AGI, which may be different from your 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 in either year your income falls below those caps, you should be fine.
2. Review your loan details
However, there are approximately 5 million borrowers with older student loans, known as Commercially Owned Federal Family Education Loans (FFEL), which are actually with private companies rather than the government. (You can check your loan type at Studentaid.gov, again, by going to the “My Aid” tab.)
The Department of Education said it is working to make sure that borrowers who have these loans get forgiveness as well, even though they don’t carry the same debts.
But if you have these loans and want to make sure you’re included in your forgiveness sooner rather than later, you may want to incorporate them into your main federal student loan program.
3. Contact the loan service (if necessary)
If you have questions for your server about tolerance, call as soon as you can, experts say.
“Loan officers are likely to be inundated with questions that begin a few days before the deadline,” Kantrowitz said.
You will also need to make sure that the provider, as well as the education department, has your most recent contact information. You can make sure that the data is up to date on StudentAid.gov, Kantrowitz said.
This will ensure that no important information about the forgiveness process is missed.
Once the order ends, seek relief as soon as possible
The Department of Education said until the loan cancellation application is ready, Borrowers can sign up on their website for updates.
Ideally, you’ll be ready to seek relief once you start applying, experts say.
Recent news that some Republicans may file a legal challenge against student loan forgiveness means that the forgiveness could be at risk. Kantrowitz said that if your loans were forgiven before a lawsuit ran into you, you might be able to keep them, “even if the courts rule against the Biden administration.”
Kantrowitz said borrowers should aim to apply for the forgiveness no later than November 15.
That’s because the Department of Education says it will take up to six weeks for borrowers to cancel after they apply, and you want your balance reduced or off-balanced by the time the pandemic-era payment moratorium on federal student loans ends on December 31. .
“If the forgiveness will completely write off your debt, you can avoid having to make any payments on your student loans,” Kantrowitz said.