Applications for President Joe Biden’s one-time, widespread student loan forgiveness are not yet available, but borrowers can still take a number of steps to prepare when they are.
Biden announced last month that his administration would forgive up to $20,000 for federal borrowers who were Pell Grant recipients, and up to $10,000 for everyone else. meet certain income requirements. But to qualify for the relief, most borrowers will need to apply for it on the United States Department of Education website.
The launch of the app is still weeks away, according to the most recent information from the Ministry of Education. There is no specific information available yet on what the application will entail, except that it will be “simple”.
But while they wait, borrowers should prepare the necessary information so that they can apply as soon as possible, especially because the discount will be given on an ongoing basis. The sooner you apply, the sooner you will see your account balance decrease, assuming you are eligible.
“I think one thing that’s important if you’re a borrower is to know your servicing agent, that’s the first thing,” says Bobby Matson, Founder and CEO of To reimburse, a debt management company. “Prepare your information. Download your data, get an idea of your balance »
A repairer is essentially the middleman between you and the federal government. They bill you monthly and track your payments. For federal borrowers, this could include Aidvantage, Edfinancial Services, FedLoans Servicing, Great Lakes, MOHELA, Nelnet, or the Oklahoma Student Loan Authority.
It’s especially important to check which company is servicing your loans now, as millions of borrower accounts have changed during the COVID-19 pandemic. The last business you made a payment to before the federal payment break was implemented may not be the business that currently holds your loans. To find your repairer, log on to My Federal Student Aid (FSA).
Check your loan type
You will also be able to view your loan details, including your balances and the type of loan you have, through your FSA account. Most federal borrowers and types of loans are eligible for forgiveness; however, there are some exceptions.
All direct loans are eligible, as are graduate and Parent PLUS loans held by the Department of Education. That said, there are a few million borrowers who have commercially held Federal Family Education Loans (FFELs). These are held by private companies and are not currently eligible for the discount. But those borrowers might be able to pool into a direct loan, and the government has said it is trying to find a way to expand eligibility for those loans.
You can also determine now if you qualify for a rebate based on your income. People who got a adjusted gross income (AGI) under $125,000 – and under $250,000 for married couples and heads of households – in 2020 or 2021 are eligible. You will certify your income yourself. If you are close to the threshold, check your AGI on line 11 of your tax return, IRS Form 1040.
If you took out your loans after 1994, you will also be able to see if you are a Pell Grant beneficiary in your FSA account.
Don’t wait to apply
Borrowers can expect to see the relief reflected in their accounts around four to six weeks after submitting their application, according to the Department of Education. That said, this is the first time the department has undertaken something of this magnitude. Borrowers should therefore expect potential setbacks and delays, says Matson.
The Department of Education is encouraging borrowers to apply by Nov. 15 so the relief will be reflected in their accounts — and their monthly payments recalculated — before federal payments resume in January 2023.
That said, around 8 million borrowers could have their debt forgiven automatically, no application required, according to the Department of Education. They will be notified by their servicer if the forgiveness is automatic.
Everyone else should ensure they have the information necessary to make the application process as seamless as possible. There will also be a paper application available at a later date for those who do not or cannot apply online.
“Know your credentials, know your repairman,” says Matson. “It’s the best thing. Borrowers can do this now.
Sign up for the Makeshift Features mailing list so you don’t miss our biggest features, exclusive interviews and surveys.