Student loan forgiveness has been a hot topic since President Biden’s announcement in August of this year. The plan will forgive up to $20,000 in federal student loans for millions of low-income to middle-income borrowers. To be more specific this is up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the U.S. Department of Education and up to $10,000 in debt cancellation to non-Pell Grant recipients.
The U.S. Department of Education has announced that the applications for student loan forgiveness will be released in early October. To be eligible, your annual income must have fallen below $125,000 for individuals or below $250,000 for married couples or heads of households. If you are applying for student loan forgiveness, you should remain aware of the following important dates.
4 Key Dates for Student Loan Forgiveness
1 Early October 2022
As mentioned above, early October 2022 is the date that student loan forgiveness applications will be available. Watch for updates on an exact date. You can register for U.S. Department of Education updates by completing this form. Roughly 8 million borrowers will qualify for automatic student relief since their data is already available to the Department of Education. The remaining 35 million borrowers will be required to complete an application.
2 November 15, 2022
November 15th is the date recommended by the Department of Education by which you should submit your student loan application. Clearly, the majority of borrowers won’t receive relief automatically, so you must apply. Once you’ve submitted your application, it will need to go through an approval process that may take weeks. According to the U.S. Department of Education, you can expect relief in 4-6 weeks if approved.
3 December 31, 2022
Undoubtedly, this is an important date because it is the day the pause on federal student loans expires. Just to reiterate, applying early is recommended, because the pause in student loan payments is set to end on December 31, 2022. On January 1, 2023, interest will begin accruing again and regular payments will resume. This will apply to whatever balance has not been erased by loan forgiveness, or for the entire balance if you have not gotten your application in early. This is an important date for student loan borrowers to note, especially if your balance outweighs the amount forgiven.
4 December 31, 2023
Finally, although you will want to complete your application as soon as you can, December 31, 2023, is the official cut-off for submitting student loan forgiveness applications.
Be prepared to apply for student loan forgiveness
According to the White House fact sheet, the cost of attending college has skyrocketed, but federal support has not kept pace. The fact sheet mentions that student loan debt is at $1.6 trillion and climbing for 45 million borrowers. Student loan relief is aimed at providing targeted debt relief to address the financial harms of the pandemic. The fact sheet states that nearly 90% of debt cancellation benefits will go to borrowers earning less than $75,000.
To prepare for the launch of the online application, gather all of your relevant student loan documents and other required information. Ideally, you would like to be prepared to request relief as soon as the application launches in early October. Furthermore, aim for having your application for forgiveness completed no later than November 15th. Importantly, the Department of Education is saying that it can take approximately up to six weeks for borrowers to get a cancellation after they apply. Certainly, you want to ensure that your balance has been reduced or eliminated prior to the end of the pandemic payment pause on December 31, 2022. Mark down all of the key dates for student loan forgiveness so you don’t forget.
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