Who qualifies for the student loan forgiveness plan and when can you apply for it?
The vast majority of student debt borrowers are entitled to up to $20,000 of loan forgiveness, but will need to apply to trigger the relief.
Back in August President Biden announced details of the long-awaited student loan forgiveness initiative that he had promised while campaigning for the 2020 election. As a candidate, Biden had pledged to enact widespread debt forgiveness for student loan borrowers but offered few specifics on what graduates could expect.
Speaking from the Roosevelt Room two months ago, Biden said: “When I campaigned for President, I made a commitment — I made a commitment that we’d provide student debt relief. And I’m honoring that commitment today.”
The program is offering $10,000 in debt relief for borrowers with an individual income of no more than $125,000 per year, or $250,000 for couples who file jointly.
There is an additional $10,000 in debt forgiveness for borrowers who received a Pell Grant while in college, allowing them to write off up to $20,000 in student loan debt. The Pell Grant is typically awarded to undergraduate students from low-income households.
So far the Department of Education has not given an opening date for claimants to apply for the support. However it has consistently stated that an online form will be made available in October 2022. To be notified when the process has officially opened, sign up at the Department of Education’s subscription page.
Until then, you can prepare by ensuring that you have a StudentAid.gov online account and that your loan servicer has your most current contact details.
Millions may miss out on student loan forgiveness
The application process will go live in the next few weeks but there are already concerns that the government is not doing enough to publicise the program. Although the process is fairly straightforward it does require recipients to actively claim the support, meaning that some will miss out.
“Those who need it the most won’t get it, and it will make the policy more regressive,” claimed Thomas Gokey, co-founder of the Debt Collective. “There will be a higher percentage of people making $124,000 a year who apply than people making $30,000.”
The vast majority of borrowers will fall within the $1250,000 ($250,000) income threshold. However an estimate from the DoE suggests that around 20% of qualifying borrowers may forget to claim before the deadline of 31 December 2022.
That would mean 7 million people missing out on up to $20,000 in student loan forgiveness.
Higher education expert Mark Kantrowitz warns: “I’ve seen too many examples in which people assumed that they were ineligible for something, but actually were eligible, and ended up leaving money on the table.”