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Confused by Biden’s student loan forgiveness plan? Read it

Student borrowers across the country will have until December 2023 to apply for up to $20,000 in remission from the federal government.

And the Biden administration announced Tuesday that it plans to roll out a “short and simple” online application later this month that borrowers can complete on their phone or computer. Administration too offered an overview of the proposed application process.

President Joe Biden’s one-time maneuver is meant to help solve the student debt crisis that has soared to more than $1.7 trillion. Biden plans to forgive $10,000 of debt for each borrower who earns less than $125,000 a year, or $250,000 for taxpayers who file jointly. It also wants to provide additional relief of $10,000 to any borrower from a low-income background.

Student loan forgiveness should help millions of borrowers, even if it won’t solve the larger problem of the rising cost of college education and the continued accumulation of new debt.

Here are points on how to claim loan forgiveness and the big questions surrounding Biden’s plan.

Should I apply for student loan forgiveness?


The Biden administration may provide automatic relief to certain borrowers who have income data on file with the Department of Education. Experts say, however, that this should not be counted on and that loan recipients plan to apply for forgiveness.

What loans are eligible? And how will it work for borrowers?

Loans held by the public are eligibleincluding Subsidized Loans, Unsubsidized Loans, Parent PLUS Loans, and Graduate Loans PLUS held by the U.S. Department of Education.

Michele Shepard, director of college affordability at the Institute for College Access and Success, said borrowers, including parents who have taken out loans for their child’s education, should be prepared to complete the application.

“The expectation is that once borrowers apply, they will either receive full relief – their balance will be totally wiped – or the amount they are entitled to will be withdrawn from their account,” Shepard said. The institute is a nonpartisan, nonprofit organization that advocates for affordability, accountability, and equity in higher education.

If the government cancels a loan, the borrower’s payment schedule will be updated based on the canceled amount, she said. Borrowers can also enroll in income-based repayments, which means recalculating payments based on the borrower’s income, which could also lower their monthly bill.

The federal program will cancel up to $20,000 of state-funded loans, but will not offer cancellation for private loans.

How can student borrowers apply for loan forgiveness?

In a Tweet, the White House said the application process will not ask for the borrower’s Federal Student Aid ID number or any other additional information. Instead, once the application is rolled out, borrowers will only need to complete a short application that includes the borrower’s social security number.

After the borrowers request, the education department will contact you if they need additional information.

The White House said the app will be hosted on a website ending in .gov and borrowers should beware of scams.

Karen McCarthy, National Association of Student Financial Aid Administrators vice president for public policy and federal relations, said borrowers should familiarize themselves with information about their borrowers before applying, including the amount they owe and the type of loans they have.

The best way to do this is to check their Federal Student Loan Identification Account.

How Borrowers Can Be Informed About the Application Process

Although Chalkbeat and other news publications continue to provide information on the application process, the best way to keep up to date with developments is to sign up for the federal government’s newsletter on the subject.

Shepard said loan servicers should communicate with borrowers, but the newsletter will let them know of updates as they become available.

Readers can register here.

Borrowers can also receive SMS and email alerts by activating those of their Federal Student Loan Identification Account.

Just in case, borrowers should plan for delays

As the federal government plans to get applications approved by the start of the new year, Shepard said it’s a good idea to be prepared to have to continue repaying loans in the event of a delay.

“I think people should protect themselves and be prepared to manage if they have to pay back a little bit if their claim isn’t granted immediately,” Shepard said.

Will this even happen since there are lawsuits regarding student loans?

It’s hard to say until the legal challenges play out, but the Biden administration has so far pushed ahead with its plan.

The latest lawsuit from conservative advocacy group the Job Creators Network argues that Biden violated federal procedures by not seeking public input on the program.

Last month, six Republican-led states filed a lawsuit accusing the administration of overstepping its executive powers. And another lawsuit from Wisconsin was recently dismissed.

How will this solve the cost of college education nationwide?

This will not be the case.

But the Biden administration has promised changes to make student loan repayment less burdensome.

The department is proposing to reduce monthly payments for low- and middle-income borrowers by halving – from 10% to 5% of discretionary income – the amount borrowers must pay each month on their undergraduate loans.

The rule would also cancel loan balances after 10 years of payments — instead of 20 years — for borrowers with original loan balances of $12,000 or less. And it would reduce interest as long as borrowers make their payments on time.

So what is the goal of fighting tuition?

State investment in colleges has declined significantly in recent decades. And there doesn’t seem to be much momentum to help change the posted price of a college education.

But the debt conversation has spurred a broader conversation about how to help students manage the cost of a college educationMcCarthy said.

McCarthy advises families to complete the Free Application for Federal Student Aid to help understand the total cost of college for them. She also encourages providing families with long-term financial planning for college.

She suggests schools and counselors engage students in in-depth discussions about college options, because the cost of a private college versus a public institution, or a four-year college versus a two years, varies enormously.

Jason Gonzales is a journalist covering higher education and the Colorado legislature. Chalkbeat Colorado partners with Open Campus on higher education coverage. Contact Jason at [email protected].

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