Student Loan Forgiveness …
Still on the way –
For roughly 25 million borrowers.
The Biden administration is sending emails to tens of millions of borrowers this week about its new plans to cancel student debt. The Department of Education estimates that at least 25 million borrowers could qualify.
Eligibility
- Borrowers who owe more than they did at the start of repayment.
- Those who hold Direct or other Education Department-held loans and have a current balance greater than when they entered repayment may be able to get up to $20,000 forgiven, according to Department of Education guidance. The amount of relief they will receive will depend, in part, on how much their balance has grown.
- Those who entered repayment on their undergraduate loans on or before July 1, 2005, or, if they have graduate loans, on or before July 1, 2000.
- If you have only undergraduate student loans and entered repayment on or before July 1, 2005, you will likely be eligible for the aid.
- For those with just graduate loans, or a mix of undergraduate and graduate debt, repayment must have begun on or before July 1, 2000, according to the Department of Education guidance.
- Those who have consolidated their loans along the way should not worry that their timeline reset. The Department of Education says it will look into when those underlying loans initially entered repayment.
- People who are already eligible for student loan forgiveness under one of the government’s existing programs but just haven’t yet applied.
- The Department of Education could also forgive the debt of the many borrowers who are eligible for relief but either have not enrolled in the right program or have not applied for the aid yet.
- Many borrowers still are unaware of the relief options available to them.
- Students from “low-financial value” programs.
- In the fall, the Department of Education will also likely try to cancel some or all of the debt of those borrowers who attended schools that lost their eligibility for federal funding, suddenly closed or provided “low financial value,” the agency said.
What Next
There is nothing you need to do. No application is needed. ED is expected to publish its final rules on debt relief sometimes in October. They will likely move quickly after that time to cancel loans to stay ahead of lawsuits.
Key Dates
If for some reason you do not want student loan forgiveness you must OPT OUT of the debt forgiveness. Contact your loan servicer no later than August 30.
Due to a provision from the American Rescue Plan Act of 2021, student loan forgiveness is federally tax-free through 2025. It is still possible to be taxed by your state.