Student loan forgiveness: Four important dates to keep in mind
The long-awaited write-off for millions of student loan borrowers was finally unveiled last week; here are the key dates for your diary.
After more than 18 months in the White House President Biden finally delivered on his campaign pledge to offer widespread student loan forgiveness to borrowers.
The initiative, which will eliminate up to $20,000 from the recipient’s student loan debts, was announced last month in a White House statement.
As part of a three-part plan to make higher education more affordable, the press release confirmed that it would: “Provide targeted debt relief to address the financial harms of the pandemic, fulfilling the President’s campaign commitment.”
But initially there were few details related to the program, with borrowers wondering what they need to do to trigger the forgiveness and whether there was an end date for the support. Fortunately in recent weeks we have learned more and more about the student loan forgiveness and the four key dates for your diary if you are hoping to benefits from the program.
‘Early October’, 2022 – Applications made available
The White House announced that $10,000 in student loan forgiveness would be available for most low- or middle-income borrowers, with recipients of the Pell Grant able to receive an additional $10,000.
A statement from the Department of Education announced that the application process to claim the relief would be ready by “early October.” Borrowers can also ensure they stay in the loop by registering for updates from the Department website.
15 November, 2022 – Target for applications
This date is by no means set in stone, but higher education expert Mark Kantrowitz told CNBC that claimants should look to submit their applications no later than 15 November.
In announcing the forgiveness last month Biden also extended the moratorium on federal student loan payments until the end of the year. This means that after 31 December the payments and interest will recommence. It is advisable to get the balance reduced before the payments go live again, otherwise borrowers risk paying off a loan that is about to be wiped.
The Department of Education advises that it may take up to six weeks for the forgiveness to be processed so submitting by 15 November should ensure your balance is credited before the end of the month.
31 December, 2022 – End of student loan moratorium
Since the start of the pandemic, students have not been required to make payments on their federal student loans and no interest has accrued on the balance. However, after seven extensions, the moratorium looks certain to finish at the end of December.
Borrowers should bear this in mind to ensure that they are not caught cold when the monthly payments return. After nearly three years without a payment, your personal circumstances may have changed and you could benefits from a new payment plan.
31 December, 2023 – Final date to apply
While Biden’s student loan forgiveness plan is indeed widespread, it is not infinite. The Education Department has set a preliminary deadline of 31 December 2023 for any borrowers looking to claim the support to have filed their application.
This could change in the coming months, likely depending on how efficiently the applications can be processed, but for now the end of 2023 is the cut-off point for recipients.