In order to gain approval for President Biden’s plan to cancel up to $20,000 in student debt, millions of borrowers will need to fill out an application, which will likely be available within weeks.
According to White House sources, the the application will probably be open at the beginning of October. Borrowers can take a few steps in the meantime to ensure they are ready to complete the form when it goes live.
Since only certain forms of debt are covered by the plan and some borrowers will have access to higher forgiveness limits than others, experts advise borrowers to understand their loans and eligibility before submitting an application. Melissa Byrne, executive director of WeThe45Million, a group of activist borrowers who have lobbied for debt relief, said that even if you have everything ready to apply, there may be technical issues because millions of borrowers will likely flood the site when the application goes live.
Byrne remarked, “I’m sure the Biden administration is fully committed to providing assistance, but it’s a very complex system.” “Everyone wants immediate relief.”
Here are five things you can do right away to start preparing for your candidacy.
Sign up for app alerts
Sign up to receive a notification from the Department of Education that will let you know when the app is available. This can be done on the Department of Education’s subscription website. Check the box labeled “NEW! Federal Updates on Student Loan Borrowers”
Byrne stressed the importance of monitoring your email and spam filters to information of the Ministry of Education. “Be attached to your email in case you receive a message,” she advised.
Determine if you are a Pell Grant winner.
People who have won Pell Grants to fund their education are eligible for debt forgiveness of up to $20,000, double the $10,000 available to everyone else.
Byrne noted that some borrowers may not know if they got a Pell Grant, especially if their parents filled out the Free Application for Federal Student Aid (FAFSA) on their behalf. FAFSA is the financial aid application required to receive loans, aid, and grants.
“A lot of people don’t know because maybe their parents handled it when they were 17 or 18,” she said.
Visit StudentAid.gov and access your Federal Student Aid account to verify. On your dashboard, navigate to “My Help” and then to the grants and loans section, which contains the relevant information information.
Determine if your loans are protected.
The Biden administration’s plan includes loans owned by the federal government, so you need to consider whether your loans qualify. Non-public student loans will not be forgiven.
However, parent loans, known as Parent PLUS loans, and graduate student loans (as long as they are federal) are eligible.
Collect revenue data
The program is restricted to individuals with incomes below $125,000 and couples with incomes below $250,000.
According to the IRS, the program would use adjusted gross income, or AGI, which is your actual income minus certain adjustments such as student loan interest. You can find this number on line 11 of your Form 1040 tax return.
Check your AGI for 2020 and 2021, as the Biden administration has said either year will count.
Byrne said: “Everyone should figure out their AGI for those years; if it’s even a cent below $125,000 for individuals or $250,000 for married couples, you’ll qualify.
November 15 should be circled on your calendar
The Department for Education is advising debtors to apply for debt relief by November 15 in order to receive it before the student loan repayment moratorium expires on December 31.
The deadline to apply for loan forgiveness is December 31, 2023; however, the Ministry of Education says it will continue to process applications as they come in, even after refunds resume in January.
But if you want your January payments to reflect the loan relief, you must apply by November 15.