By now, you know that on August 24th, President Biden announced that the U.S. Government plans on forgiving $10,000 in student loan debt to those who qualify. But what are the qualifications?
The U.S. Department of Education has already stated the applications to apply for student loan forgiveness will be ready by “early October.” For now, it’s important to determine if you or someone you know qualifies for student loan forgiveness.
Here’s a quick list of questions and information:
Student Loan Types That Qualify
- William D. Ford Federal Direct Loan Program
- Direct Stafford Loans
- Under the Direct programs
- Parent Plus
- Grad Loans
- Direct Subsidized Federal Student Loans
- Direct Unsubsidized Federal Student Loans
Student Loan Types that do NOT Qualify
- Federal Family Education Loan (FFEL)
- Their debt is held with private companies
Did you receive a Pell Grant?
If no, you qualify for $10,000
If yes, you qualify for $20,000
Finally, if your single with a total yearly income less than $125,000 or married with total yearly income less than $250,000, than you qualify for the student loan forgiveness program.
The first thing you can do is head on over to the Department of Education’s website and enter your information for updates on the status of the form. This way, if the form isn’t already available, you’ll be notified via email the moment is live.
Once the application is out, you should make sure to apply for forgiveness no later than November 15th. The Department of Education estimates it could take up to 6 weeks for the debt cancellation to take effect. This date is especially important as the 7th and final extension of student loan pause expires on December 31st. Starting out 2023 either debt free or with a reduced loan payment sounds like a great start to the new year to us.
The final date to apply for student loan forgiveness is December 21, 2023.
Even though we’re currently in the pause and a loan forgiveness is on the horizon, you should still start saving money to anticipate your payments coming in January 2023. Even if you expect a lowered loan amount, saving now will help provide you peace of mind later.
If you’re still concerned about keeping up with your loan payments after the extensions passes, the Department of Education accepts requests for economic hardship. There’s also unemployment deferment in the event you lose your job.