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Student loan forgiveness: how to prepare now

The app for President Joe Biden’s One-time popular student loan forgiveness not yet available — but there are still some steps borrowers can take to prepare when they do.

Last month, Biden announced his administration would forgive up to $20,000 for federal borrowers who are Pell Grant recipientsand up to $10,000 for others meet certain income requirements. But in order to receive the relief, most borrowers will have to register on US Department of Education website.

The still a few weeks until the app launch, according to the most recent information from the Department of Education. There is still no specific information on what the application will ask for, except that it would be “simple”.

But in the meantime, borrowers should prepare the necessary information so they can apply as quickly as possible — especially since forgiveness will be granted on a rolling basis. The sooner you sign up, the sooner you can see your account balance drop, assuming you qualify.

“I think it’s important if you’re a borrower to know your servicer, that’s number one,” Bobby said. MatsonFounder and CEO of Pay off, a debt management company. “Your information is ready. Download your data, get an idea of ​​what your balance is”

A valet is essentially an intermediary between you and the federal government. They bill you every month to track your payments. For federal borrowers, this may include Aidvantage, Edfinancial Services, FedLoans Servicing, Great Lakes, MOHELA, Nelnet, or the Oklahoma Student Loan Authority.

It is especially important to double-check which company offers your loans right now as millions of borrower accounts have been converted during the COVID-19 pandemic. The last company you made payments before the federal payment pause was imposed may not be the company currently holding your loans. To find your waiter, log in My Federal Student Aid (FSA).

Check your loan type

You will also be able to view your loan details, including your balance and the type of loan you have, through your FSA account. Most federal borrowers and lenders qualify for forgiveness; However, there are a few exceptions.

All direct loans are eligible, as are the Graduate and Parent PLUS loans held by the Department of Education. That said, there are several million borrowers with a commercially held Federal Family Education Loan (FFEL). These are held by private companies and are not currently eligible for forgiveness. However, such borrowers may consolidated into one direct loanand the government said it was trying to find a solution to expand eligibility for those loans.

You can also find out now if you qualify for forgiveness based on your income. Individuals who have earned adjusted gross income (AGI) less than $125,000 — and less than $250,000 for couples and heads of household — in 2020 or 2021 are eligible. You will self-confirm your earnings. If you’re close to the threshold, check your AGI on line 11 of your tax return, IRS Form 1040.

If you took out a loan after 1994, you’ll also be able to see if you’re a Pell Grant recipient in your FSA account.

Don’t wait to apply

According to the Department of Education, borrowers can expect to receive the relief reflected in their accounts about four to six weeks after they submit their application. That said, this is the first time the department has done anything of this magnitude — so borrowers should expect some glitches and possible delaysMatson said.

The Department of Education encourages borrowers to apply by November 15 so the relief is reflected in their accounts — and their monthly payments recalculated — before subsequent federal payments. continued in January 2023.

All that said, about 8 million borrowers can have their loans forgiven automatically without an application, according to the Department of Education. Their waiter will notify them if the forgiveness is automatic.

Everyone else should make sure they have the information they need to make the check-in process as smooth as possible. There will also be a paper application at a later date for those who are unable or unable to apply online.

“Know your credentials, know your waiter,” says Matson. “It was the best thing. Borrowers can do it now.”

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