With the application for federal student loan forgiveness set to go online at any time, Department of Education officials say those looking for help can do a few things now to make the process smoother.
President Joe Biden announced the plan to forgive student loan debt in August that would cancel $10,000 worth of federal student loan debt for those with federally backed student loans, and $20,000 worth of student loan debt for those who received Pell Grants.
Before the application process opens up, here are some steps to take now to get ready.
1. Check if you are eligible.
How do you know if you are eligible for debt relief? Here are the guidelines:
· To be eligible, your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households)
· If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt relief.
· If you did not receive a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt relief.
2. How do you know if you have a Pell Grant?
You can check your account on Studentaid.gov to determine if you have a Pell Grant.
Look under the “My Aid” section.
3. Know your AGI.
The program is open to people with incomes less than $125,000 for individuals and $250,000 for married couples.
The DOE will look at the adjusted gross income, or AGI, from your income tax return. To find your AGI for 2020 and 2021, look at line 11 on your tax return.
4. Look at the details of your loan.
Millions will be able to get the help, but some with federally backed loans will not qualify.
Last week, the Biden administration announced that those with Federal Family Education Loans (FFEL), are no longer eligible for the relief.
The loans are backed by private companies rather than the government.
If you think you have a FFEL, check the “My Aid” section of Studentaid.gov to determine if you have a FFEL.
5. Make sure your loan servicer has your information.
Contact the loan servicer to make sure it has all the information it needs prior to beginning the application process.
Make sure your information is entered and is correct on StudentAid.gov.
6. Apply as soon as you can.
If you have more than $10,000 in student loan debt, or $20,000 of Pell Grants, you should apply for the relief as soon as you can.
When the COVID-19 pandemic began, payments on federal loans were paused. The suspension of those payments comes to an end on Dec. 31. Payments on the amount you owe over $10,000 or $20,000 will begin again on that date.
According to the Department of Education, it will take about six weeks for borrowers to cancel their debts after they apply.
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