Much ado has been made about President Biden’s highly-anticipated student loan forgiveness program. This one-time forgiveness program — which has been controversial, to say the least — is set to be enacted at some point this year. Borrowers looking for $10,000 to $20,000 in loan forgiveness appear to be nearing the end of their wait.
According to a variety of sources, including correspondence directly from the government, the application could launch as soon as this week. Thus, for those interested in receiving loan forgiveness, keeping an eye on the federal student aid website will be important in the days and weeks to come. Currently, the site claims “an online form will be available in October 2022.” Hence, it’s unclear exactly when this online application will go live.
With that said, let’s dive into what borrowers can expect from this plan and what the eligibility requirements are.
How to Apply for Student Loan Forgiveness?
As mentioned, an online form will soon become available on the government’s student aid website. However, until that happens, there are a few things borrowers can do to prepare for the application.
Perhaps the most pertinent item on the agenda for most folks is to ensure eligibility. For starters, this program is capped at $125,000 in annual income for individuals and $250,000 for households or heads of households. Thus, those who benefited most from higher education in gaining high-paying jobs will be excluded from this one-time payout.
Secondly, borrowers will want to check the types of loans they have, as some are not eligible for repayment. Most loans held by private issuers, such as loans that were refinanced, will not be eligible. That said, borrowers who took on Pell Grants aimed at lower-income households may be eligible for up to $20,000 in debt relief.
Another important point to note is debt relief can be capped at the amount owed for particular individuals. For example, those who qualify for up to $10,000 in loan forgiveness but have $7,500 in student loans outstanding will only receive $7,500.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
