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Student Loan Forgiveness: What You Need to Know By Janice Parker, JP Credit Education & Consulting LLC

It appears the Biden Administration is following through on their promise and providing families some relief as they prepare to start re-paying loans after the economic crisis brought on by the pandemic. For some, this may be student loan debt elimination and for others, this may simply scratch the surface. Regardless of where you fall in the line of relief, I’m giving you all the details to make sure you are ready when the application drop.

When can I apply for student loan forgiveness?

Probably today! The federal government has said the application will be available in early October 2022. So, depending on the date that you’re reading this article, the application could be live. If not, then take your phone out now and set a reminder, or if you prefer pin and paper, then set a reminder to check weekly until the application is released.

Who qualifies for student loan forgiveness?

Probably you! So, unless you were balling out of control in 2020-2021, you likely will qualify. All federally held subsidized loans, unsubsidized loans, and graduate PLUS loans are eligible. Consolidated loans also qualify for relief if all the combined loans that are federally held were taken out on or before June 30. Here are just a few of the basic qualifiers:

  • You must have federal loans
  • Your 2020-2021 income was less than $125,000 or $250,000 for households.
  • If you received a Pell Grant you can get up to $20,000 canceled, and everyone else up to $10,000.

If you’re unsure if you ever received a Pell Grant, create an account (an FSA ID) at StudentAid.gov or log in if you already have one. It’s good that you log in any way to make sure your contact information is accurate. We don’t want to give any reasons for ineligibility. Although an FSA ID is not required to apply for forgiveness, it can be extremely helpful. An FSA ID can assist you in finding out if you received a Pell Grant while in college. It will also show your loan servicer(s), types of loans you have and what you owe. (If you received a Pell Grant before 1994, that information won’t display on StudentAid.gov, but you’ll still receive the full benefit.) If you still have a balance after debt forgiveness, your monthly payment will be recalculated based on your new balance, potentially reducing your monthly payment. Your loan servicer will let you know what your new payment amount is.

What about Parent PLUS Loans?

They heard y’all screaming “what about us?” The Biden Administration didn’t forget about the parents with PLUS Loans. A parent with parent PLUS loans for their child may qualify for debt relief if they meet the income eligibility criteria. Unfortunately, at the time this article was written, private loans aren’t eligible for any forgiveness as well as Federal Family Education Loan Program, or FFEL.

Can I get a refund of past student loan payments?

Yep! Shut your mouth and keep on reading. Borrowers may be eligible for refunds, but only if they made payments during the pandemic that brought their balance below the relief award. Now I don’t know how many of y’all were making payments during the pandemic pause, but if this is you, KUDOS and you may be eligible for a refund. So, for example, if you had $11,000 in debt before March 13, 2020, and paid it down to $9,000, you could receive a $1,000 refund.

How do I apply for student loan forgiveness?

The application for student debt relief is expected to be available in “early October.” You should expect to receive an email alerting you or you can keep checking StudentAid.gov for updates. If you don’t do email, you most definitely need to log into your online account to get information. If you don’t fool with the internet either, find a trusted kid or grandkid to help you out. You can also call the Federal Student Aid Information Center at 1-800-433-3243

Borrowers won’t need to upload any documentation or have an FSA ID to submit their applications. Initially, the application will be available ONLY online. A paper version will be made available later. Again, it’s extremely important to update your contact information at StudentAid.gov because the government is expected to send you updates by email and text message, so make sure to sign up to receive text alerts.

This loan forgiveness program should not be confused with the Public Service Loan Forgiveness (PLSF) program. Borrowers who are employed by non-profits, the military, or federal, state, Tribal, or local government may be eligible to have all their student loans forgiven through the Public Service Loan Forgiveness (PSLF) program. Did you know that until Oct. 31, 2022, borrowers may receive credit for payments that previously did not qualify for Public Service Loan Forgiveness (PSLF), like the pandemic pause on payments? For more information on eligibility and requirements, go to PSLF.gov.

Here’s a recap of the important dates you need to know for the loan forgiveness program.

  • October 2022 – Application will be released. The Department of Education recommends that everyone with student loan debt apply. This means you, your brother, sister, cousin and everybody you know with student loan debt.
  • November 15, 2022 – Apply by this date. It’s estimated that it will take 4-6 weeks for applications to be accepted. That means if you want your balance eliminated or reduced before the student loan payment pause ends on Dec. 31, 2022, you need to submit your application before Nov. 15.
  • December 31, 2022 – After several extensions of the pandemic-era payment pause on federal student loans, the pause is finally set to end come the new year. (Singing Boys to Men… “It’s so hard, to say goodbye to yesterday.”)
  • January 1, 2023 – If your entire balance is not forgiven, payments and interest will resume on your remaining balance.
  • December 31, 2023 – Final deadline to apply for student loan forgiveness.

I know all this student loan information can be overwhelming – but the impact to your finances and mental health are well worth the knowledge. Put these resources in your toolbox and use when necessary. If you want to learn more about how to thrive in your financial journey, schedule a consultation with me.

Janice Parker, AFC® Candidate

JP Credit Education & Consulting LLC

www.jpcreditconsulting.com