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If you are one of the 8 million federal borrowers currently enrolled in an income-driven repayment plan, your student loan balances will be automatically canceled – no action is necessary.
For everyone else, don’t worry! You can still apply to have a portion of your student loans forgiven. Balances may drop by as much as $20,000 upon approval. And while you won’t need to upload any documents during the initial application process, you will eventually need to do so to prove your income level.
Am I eligible for student loan cancellation?
Here is a reminder of the requirements for those eligible to receive up to $10,000 in relief:
- For 2020 or 2021, your income must be below $125,000 if filing individually or $250,000 if filing jointly.
- You cannot have received a Pell Grant during college.
- Your loans must be one of the following: undergraduate direct loans; graduate direct loans; parent PLUS loans; PLUS graduate Loans; government-owned Perkins Loans, or government-owned Loans under the Federal Family Education Loan Program, or FFELP.
- Additionally, these Loans must have been disbursed by June 30th, 2022.
- Up to $20,000 in relief is available for those who:
The requirements are above, except for not receiving a Pell Grant.
- Received a Pell Grant during college. Using your FSA ID, you can find out if you received a Pell Grant by logging on to the National Student Loan Data System or Federal Student Aid website. Your previous aid information should be on the Financial Aid Review page.
- Only undergraduate debt is eligible for the additional $10,000 in cancellation.
When will the student loan cancellation application be available?
Below are some notable dates to keep in conjunction with the newly available application:
- October 23rd: The date stated by the Biden administration beyond which they do not expect relief before then.
- Mid-November: The date you must apply if you want to guarantee to receive relief before payments restart in January.
- January 1st, 2023: This is when federal student loan payments resume.
- December 31st, 2023: This is the deadline for submitting a student loan debt relief application.
- March 31st, 2024: The proof-of-income submission cutoff point
Below are the requirements for student loan cancellation:
The student debt relief application provided by the education department requires borrowers to provide the following:
-Social Security Number.
-Date of Birth.
-You must also verify that you will provide proof of income to the education department by March 31st, 2024, and agree that you certify all information submitted is accurate under penalty of perjury.
The following documents can be used as proof of income:
- IRS Form 1040 from 2020 or 2021,
- IRS Tax Return Transcript from 2020 or 2021, or if you did not file taxes, an IRS Verification of Non-filing letter from 2020 or 2021
People not eligible for relief:
- If you have private student loans
- If you have commercially held FFELP loans. Those who applied to consolidate their debt before September 29th, 2022 would qualify.
How to opt out of student debt relief
Those who are eligible to receive the relief automatically can choose to opt-out. At the moment, it’s unclear how to opt-out, but the Education Department is expected to release more information about this.
Why would anyone choose not to receive help?
Some people who owe money don’t want their debt forgiven, and others may worry about what canceling the debt could mean for them tax-wise. Even though there is no federal income tax on canceled debts, some states—Arkansas, California, Indiana, Minnesota, Mississippi, North Carolina, and Wisconsin—may treat the canceled amount as taxable income.
How will I be notified of the cancellation?
According to the Education Department, you can expect to receive relief within six weeks. They will notify you of any changes to your loan account through your servicer or at studentaid.gov.
What if I receive a call from someone claiming to have student debt relief?
If someone calls you about cancellation unsolicited, it is likely a scam. Since President Joe Biden announced loan cancellations, the Federal Trade Commission stated that scams have been on the rise. The call is not from the Education Department or your servicer regarding debt relief if you receive such a call. If you are unsure about the validity of a call, hang up and contact your servicer instead. Also, ignore any unsolicited student loan cancellation text messages; replies give scammers what they want–your personal information like Student Aid Identification numbers or passwords to accounts.