On August 24, 2022, President Joe Biden, Vice President Kamala Harris, and the U.S. Department of Education announced a three-part student loan debt relief plan to help federal student loan borrowers following the pandemic. The three-part plan includes an extension of the pause on student loan payments, debt cancellation, and a proposal to create an income-driven repayment plan to help lower future monthly payments. The main focus of the announcement was the debt cancellation, which is a promise Biden made while on the campaign trail to his perspective voters. “My commitment was if elected president, I was going to make government work to deliver for the people. This rollout keeps that commitment,” Biden said at a press event. “Just as I am keeping my commitment to relieve student debt as borrowers recover from this economic crisis caused by the once-in-a-lifetime pandemic.”
You may be asking “What does the new student loan relief mean to me?” and “How do I get the student loan relief?”. Don’t worry, we have you covered. Here is a breakdown of what is in the plan and how you can get student loan debt relief.
What is the Student Loan Forgiveness Plan?
Biden’s federal student loan debt relief plan is to cancel as much as $10,000 in federal student loan debt for people earning less than $125,000 a year, or less than $250,000 for married couples. Those who received Pell Grants, federal aid for lower-income students, could see up to $20,000 forgiven. Most people with federal student loans are below the income threshold and would qualify for Biden’s plan. Undergraduate loans, graduate loans and Parent Plus loans held by the Education Department are all eligible for cancellation. Borrowers employed by non-profit organizations, the military, or federal, state, tribal, or local government may be eligible to have all of their student loan debt forgiven through the Public Service Loan Forgiveness Program.
Biden officially launched the application Monday, October 17th, after the Education Department opened the form over the weekend as part of a beta test, hoping to find and remedy any glitches on the site. Eight million people have applied to date, the president said. He estimates that the White House has received some 10,000 letters from borrowers praising one of his signature economic policies.
Who qualifies for this student loan forgiveness program?
Most people with federal student loans are below the income threshold and would qualify for Biden’s plan. Undergraduate loans, graduate loans and Parent Plus loans held by the Education Department are all eligible for cancellation.
How do I apply for student loan forgiveness?
Applicants have to submit their Social Security number, name, date of birth, phone number, email and attest to earning less than the income caps set for relief. You will not have to attach any documents or log in with your federal student identification number. Forgiveness is limited to borrowers who earned less than $125,000 in 2020 or 2021, or less than $250,000 for married couples. You will need to certify that the information submitted is correct. Anyone who submits false information could be subject to penalties including fines or imprisonment. Applications will be reviewed by the Education Department’s Federal Student Aid office and matched with borrowers’ federal records to confirm eligibility.
To view the federal student loan debt relief application, visit https://studentaid.gov/debt-relief/application
Is there a deadline to apply?
Borrowers have until Dec. 31, 2023, to apply for the forgiveness program. But the administration has recommended that people apply by Nov. 15 of this year to have the form processed before the pause on federal student loan payments ends. Payments are set to resume in January.
When will my application be processed?
The Education Department previously said applications filed during the beta test will be processed once the application officially launched. But the department said it will not cancel any loans before Oct. 23, according to a court filing. The Biden administration is fighting several lawsuits attempting to block the policy and has agreed to stand down on discharges in at least one of those cases. “Litigation is underway, and our legal judgment is that it won’t get in the way of the program,” Biden said on October 17, 2022, “But they are trying to stop it.”
A federal judge in Missouri is deliberating on whether to impose an injunction to halt the program until a ruling is made on a lawsuit brought by six Republican-led states. In the meantime, the department is collecting applications.
The administration has said applicants will receive relief within four to six weeks once it begins processing them.
Nazaire & Co
Navigating the financial world post-graduation is no simple task. That is where Nazaire & Co comes in. We take every step possible to leave you with peace of mind concerning your financial freedom. Our experts have over 25 years of experience dealing with personal, small business, and corporate tax preparation and financial guidance. If you have any questions regarding President Biden’s Student Debt Relief Program and how it affects your finances, reach out to us today!