On October 17th, the Biden administration launched its Student Loan Forgiveness application.
President Biden’s loan forgiveness program has been seen as a massive win for many middle- and lower-income students. Over 40 million Americans will finally have the chance to see some financial relief after years of waiting for the government’s final decision.
Before the loan repayment pause during the pandemic, graduates dealt with an average monthly student loan payment of $300. The higher monthly loan rates made it hard for the average graduate to save money for traditional milestones like buying a house, having kids, or even buying a new car.
So how exactly can you apply for the loan forgiveness program? Our quick guide has everything you need!
Biden’s Loan Forgiveness Plan: A Quick Review
Before you sign up, let’s review the forgiveness plan’s features and see how it’ll benefit you. We get into the nitty-gritty of everything in our previous article, so we won’t go into too many details here.
With Biden’s program, anyone who earns less than $125,000 (or $250,000 for married couples) a year is eligible for up to $10,000 in loan forgiveness. Additionally, anyone who received a Pell Grant is eligible for up to $20,000 in loan forgiveness. Of the 40+ million eligible for the program, 23 million will have their balance completely wiped out!
How To Sign Up For Student Loan Relief
Signing up for student loan relief is easy and only takes a few minutes. All you need to do is visit the application website and enter your personal information, including your name, SSN, and other personal details. It’s a single page form and it takes all of two minutes to complete – easy peasy!
Once you’ve submitted everything, you’ll receive an email from Federal Student Aid confirming that they’ve received your information. Unless the Department of Education needs more information, you’re all set. The student loan forgiveness should be reflected in your student loan servicer account from there.
Is There An Application Deadline?
The loan forgiveness application will be open until December 31st, 2022. While the deadline is still two months away, we recommend you apply as early as possible, especially if you still have a loan balance. The faster your application is approved, the earlier you can lower your monthly payments before they resume this January (or wipe out the remainder of your debt before the end of 2022, so that you won’t have any payments due next year).
How Long Will It Take For Your Student Loan Forgiveness To Be Approved?
After submitting your application, it’ll take about four to six weeks to hear back from the Department of Education. Once everything is approved, they’ll send your information to your loan servicer for your debt relief to go into effect.
The Department of Education has also stated in a recent court filing that they won’t be canceling student debt until after October 23rd, so applicants will start seeing their debt relief next month.
Will Biden Also Extend The Student Loan Pause?
The Biden administration will not extend the student loan any further (past December 31st, 2022) and regular payments will resume in January 2023.
However, the Department of Education is proposing new rules to make managing your debt easier. Instead of the previous 10% cap on discretionary income, the minimum will be brought down to 5%. Other measures include shortening the loan period to 10 years and raising the non-discretionary income threshold to help low-income earners. Now would be the time to negotiate a monthly payment you can manage before the loan pause runs out.
The Bottom Line
As President Biden stated, “ninety percent of that relief will go to people making less than $75,000 per year.” There’s no doubt that the student loan crisis has gotten out of control in recent years. But after so long, millions of low and middle-income borrowers will finally see some relief. If you still need to do so, remember to take a few minutes to fill out your application today!