In August 2022, President Joe Biden announced his strategy for student loan forgiveness. This unprecedented arrangement will provide up to $20,000 in federal student loan cancellation for up to 20 million borrowers.
Biden’s plan is designed to reduce the burden of student loans on borrowers who took out loans while in school and may have been over their heads in making monthly payments.
Here’s an overview of the plan and the steps borrowers should take to benefit.
Eligibility and Application Process
Borrowers must earn less than $125,000 per year (or $250,000 if married) to be eligible for debt forgiveness under Biden’s program. This means that millions of Americans who have previously provided the U.S. Education Department with income information will be eligible for student debt forgiveness.
To qualify for Biden’s student debt forgiveness, most borrowers will need to fill out an application. According to the Education Department, applications will be available sometime in early October, and it should take 4 to 6 weeks after application for borrowers to see the relief.
Since the previously provided student loan pause is set to end in December 2022, applicants are being advised to submit their applications by November 15, 2022, so there won’t be any gaps. However, it won’t automatically be too late after this date; applications submitted after this date will be processed on a rolling basis.
Will FFEL Program Loans Be Included?
FFEL (Federal Family Education Loan) Program loans are federal loans that were originated by private lenders and guaranteed by the U.S. Department of Education. FFEL was established in 1965 to help students finance their college education.
The Education Department said in its original statement that the FFEL Program loans would not be eligible for student loan forgiveness under this plan. Since then, the Department has proposed that FFEL loans may be eligible if combined into a federal Direct consolidation loan, but further information is required.
How Often Will There Be Student Loan Forgiveness?
Officials from the Education Department acknowledged that the Biden student debt forgiveness plan is a one-time arrangement, and borrowers should not expect it to be repeated.
Keep an Eye on Developments
Millions of Americans are swamped with student loan debt that affects them in many ways. Student loans can take a major chunk out of a family’s monthly income and, in the long run, affect your credit score, ability to buy a house or car, and even get a job.
In the coming weeks, the Education Department will likely release more information about President Biden’s loan forgiveness plan, so it would be wise to stay current on new developments.
If you have questions about this plan or other debt relief methods, contact a Minnesota student loan debt relief attorney at Hoverson Law Offices, P.A.
We target Minneapolis, Bloomington, and the surrounding Minnesota communities.