It didn’t take long for federal student loan borrowers to begin applying for loan forgiveness under President Joe Biden’s sweeping debt cancellation plan. The president on Monday said 8 million Americans had already applied for relief after the application process formally launched with a beta test over the weekend.
In a joint speech with Education Secretary Miguel Cardona, Biden said the application process went on “without a glitch or any difficulty,” according remarks published on the White House website.
“It means more than 8 million Americans are starting this week on their way to receiving life-changing relief,” Biden said. “It started today, with millions more who are going to have the opportunity to do it as well. As millions of people fill out the application, we’re going to make sure the system continues to work as smoothly as possible.”
As many as 40 million Americans could benefit from the plan, which was unveiled in August. Federal student loan borrowers with an annual adjusted gross income of less than $125,000 in either 2020 or 2021 — or $250,000 for households — will be eligible for up to $10,000 in canceled debt. Those who received Pell Grants will be eligible for up to $20,000 in cancelled debt.
The application is available at StudentAid.gov. Borrowers who submit their loan forgiveness applications during the beta phase will not need to resubmit the forms. The application itself shouldn’t take any longer than five minutes to fill out. You only need to provide your full name, date of birth, phone number, email address and Social Security number. The application is available in both English and Spanish.
The U.S. Department of Education recommends applying before mid-November to ensure that debt relief hits your accounts before federal student loan payments resume in January 2023. A pause on payments has been in place since early on in the COVID-19 pandemic, but that pause is due to end on Dec. 31.
At the end of the application, borrowers must state that they’re requesting federal student loan debt relief, and that their 2020 or 2021 income was below the income caps needed to qualify for relief. Once the application is submitted, the Education Department will review it and work with your loan servicer to process the relief. You will be contacted if additional information is needed and then notified when the application has been approved.
The Biden administration couldn’t give an exact timeline on when debt relief will arrive after the application has been submitted and approved, saying only that relief can be expected within weeks.
Scott Buchanan, executive director of the Student Loan Servicing Alliance, told Business Insider that loan companies are not yet involved in the process, making it difficult to pinpoint when borrowers will get relief.
“We’re really waiting on more firm information about dates and timelines, which we don’t really have yet,” Buchanan said. “For some borrowers it can be very complicated depending upon how many different loans they have, and loan types and statuses of those loans.”
The Biden administration estimates that 81% of those who qualify for forgiveness will apply, Bloomberg reported. However, that’s no sure thing based on Government Accountability Office data showing that other debt relief programs have seen enrollment rates as low as 50%.
One thing you can count on is that the federal government will keep a close watch on scammers — a major concern, given how much money is involved and how simple the application process is. Biden said the administration is on alert to prevent fraud during the process.
“My message to fraudsters looking to cheat the American people is: Don’t do it,” Biden said. “We’re going to hold you accountable.”
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