Within the upcoming weeks, the U.S. Department of Education may launch its application for student loan forgiveness.
According to a department representative, borrowers may begin to see their sums lowered or eliminated before the end of the year.
Here are some steps you may take to get ready for the jubilee:
Make sure you meet the income requirements
Most federal student loan borrowers will be eligible for some forgiveness, according to President Joe Biden’s announcement made last week. The amount of forgiveness will range from $10,000 to $20,000 depending on whether or not the borrower received a Pell Grant, a type of financial aid available to low-income undergraduate students.
Borrowers who earn less than $125,000 annually, married couples, or household heads who make less than $200,000 will only be eligible for relief.
Check your most recent tax filings to make sure your income was below those limits. The so-called adjusted gross income, or AGI, which may be different from your actual wage, will be taken into account by the Education Department.
Line 11 on the front page of your tax return, also known as Form 1040, contains the information you need to certify your AGI for 2020 and 2021.
Make sure your loans are eligible
Due to the fact that the vast majority of borrowers, or about 37 million of them, fall under the William D. Ford Federal Direct Loan Program, they will all be qualified for the forgiveness. This group contains all Direct federal student loans, including subsidized and unsubsidized, as well as Direct Stafford Loans. Parent Plus and Graduate Loans are also eligible for the assistance under the Direct program.
Your debt is actually held with a private corporation and not the government if you are one of the 5 million borrowers with a commercially owned Federal Family Education Loan (FFEL). Consolidating your loans into the Direct Loan Program can be a good idea if you want to make sure you’re eligible for forgiveness as soon as possible.
However, the Education Department claims it will work with private lenders in the upcoming months to ensure FFEL borrowers still receive forgiveness if you don’t want to consolidate your loans.
By using their FSA ID to log in, you can check the sort of loan you have at Studentaid.gov. After that, select the “My Aid” tab.
Although the exact format of the application for student loan forgiveness is not yet known, experts advise having all necessary documentation on hand to demonstrate your eligibility.
Since the government already has information on the roughly 8 million borrowers who have been registered in income-driven repayment plans, they might not need to certify their income.
For everyone else, printing your loan records from step two and keeping those tax returns you dug out for step one might be helpful.
The awards option on StudentAid.com allows you to check if you were awarded a Pell Grant during your undergraduate studies and qualify for the $20,000 in relief. Take a picture of or print the confirmation document if you were awarded a Pell Grant.
Additionally, print a screenshot of your current student loan balance so you may check in the future to ensure that the debt reduction you received was accurate.
Keep up to date of the procedure
On the website of the Education Department, borrowers can sign up right away to get updates on the procedure for forgiving student loans, including when the application will be available.
The U.S. Department of Education says it may take up to eight weeks to discharge a borrower’s debt after receiving all required documentation from the borrower.
The application for forgiveness must be received before December 31, 2023.