In the United States, student loan debt exceeds 1 trillion dollars. The average student owes over $30,000 for their college education.
It’s no wonder that millions of borrowers have questions about the student loan forgiveness plan and wonder if they qualify.
President Joe Biden recently promised college graduates that their federal loans will be forgiven if they meet specific requirements.
By next year, 8 million borrowers may see their debt automatically forgiven. Though, many others will need to apply before the deadline.
Learn more about student loan forgiveness, if you’re eligible, how much of your student loan can be forgiven, when you should apply, and where to find a college planning specialist if you have more questions.
What is student loan forgiveness?
Student loan forgiveness is when a borrower’s debt is forgiven, and their obligation to pay their debt is canceled. Most college graduates will exit school with at least some debt.
Depending on your accumulated student debt, the total amount may not be wiped clean, but a significant amount can be if you’re eligible.
Under President Biden’s student loan debt relief plan, forgiveness will be awarded to borrowers with federal loans.
For those with other types of loans, it may be possible for them to receive forgiveness if they are in certain public service, education, or military professions.
Speaking to a college planning specialist, counselor, or advisor, can help you understand each type of student loan and the forgiveness programs available.
Who is eligible for student loan forgiveness?
Those who received federal student loans should qualify for forgiveness if their adjusted gross income didn’t exceed $125,000 during the 2020 or 2021 tax year. For married couples, the adjusted gross income rises to $250,000.
Federal student loans said to be eligible include:
- Pell grants
- Stafford loans
- Direct subsidized loans
- Unsubsidized loans
- Direct consolidation loans
- Graduate or parent PLUS loans
If you’re unsure if your loan is a federal loan, there are various ways to find out:
- You can find your servicer on your billing statement
- Log in to studentaid.gov with your FSA ID
- Call 1-800-4-FED-AID, the federal student aid hotline
How much of your student loans can be forgiven?
Your income and the type of loans you took out will likely determine how much of your student debt will be forgiven.
Most individuals with federal student loans will be relieved of $10,000 of debt.
For those who were awarded Pell grants, this amount of relief will rise to $20,000.
Before 2010, the Pell grant was given to students whose family’s yearly income was $60,000 or below.
If your student loan debt is less than the amount you qualify for, you will receive what you need to pay off that debt.
This would mean the loan forgiveness plan would cancel your entire debt. You would not receive additional money if your debt was less than the $10,000 or $20,000 you qualified for.
If your debt exceeds the amount you are eligible for, the student loan forgiveness plan will cover only a portion of your debt.
So, if you qualify for $10,000, and your debt is $13,000, you will only need to pay off $3,000 of your accumulated date.
When should you apply for student loan forgiveness
Online applications should become available sometime in October 2022.
The best way to stay informed is to log in to your studentaid.gov account, update your contact information if necessary, and sign up to receive text alerts or emails.
As important dates arise and the application becomes available, studentaid.gov will let you know.
You can also visit the U.S. Department of Education website, sign up for e-mails, and receive updates on the student loan forgiveness process.
Once the application becomes available, you should complete and submit it as soon as possible, though applicants will have until Dec. 31, 2023 to submit.
After you apply, you should see your debt relief 4-6 weeks later if you qualify.
Dates to remember
Since online applications will become available in October, keep an eye out for any changes and updates on the application process and availability throughout the month.
- Nov. 15, 2022: The Department of Education officials recommended applying no later than this date to ensure you receive student loan forgiveness.
- Jan. 1, 2023: After a three-year moratorium on student loans, regular student loan payments will resume.
- Dec. 31, 2023: As of now will be when the application period for student loan forgiveness ends.
College planning specialists offer support and resources
Paying for college can be overwhelming and challenging, especially if you don’t have access to helpful resources.
College planning specialists are experts on financial aid, grants, student loans, and scholarships.
Whether you are just applying for college or a college graduate still trying to pay off your college debts, we can help. We offer workshops to help you learn how to afford college and develop a realistic plan to pay back your debts if you must take out loans.
With the new student loan forgiveness plan at work, you may be curious if you’re eligible or how this plan will affect you.
Reach out to our professionals if you are interested in registering for a workshop or have more questions regarding the student loan forgiveness plan.