Student Loan Forgiveness: You May Automatically Qualify — Here’s Why

Document with title student loan forgiveness.
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The Biden administration is trying to make it as easy as possible for federal student loan borrowers to get debt relief of up to $20,000, having recently launched an online loan forgiveness application that can be filled out in a few minutes and an awareness campaign to notify borrowers of the process. For an estimated 8 million borrowers, relief will be automatic — and no application will even be required.

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That’s because the income information for those borrowers is already on file with the U.S. Department of Education, meaning they won’t have to apply for canceled loans, the Washington Post reported. These borrowers either recently filled out the federal financial aid form (FAFSA) or are enrolled in an income-based loan repayment plan.

Eligible borrowers will receive emails from the Education Department providing details on automatic relief options. Officials with the agency have advised borrowers to beware of companies offering help with student loan cancellation in exchange for payment.

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As previously reported by GOBankingRates, the loan forgiveness application process formally launched with a beta test over the weekend. By Monday, millions of borrowers had already applied.

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.

As many as 40 million Americans could benefit from the plan. The vast majority will have to go to the Education Department’s Federal Student Aid website to fill out the application, where they’ll be asked to provide personal information and confirm that they are applying for relief and meet the eligibility requirements.

That’s not the case for those who can be automatically enrolled, however. As the WaPo reported, if automatic enrollees don’t bow out, the Education Department will process their relief after Nov. 14. Borrowers eligible for automatic relief can fill out an application if they want the cancellation processed sooner.

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Some borrowers might be leery about accepting debt relief amid reports that in some states the canceled debt will count as income that can be taxed. The Education Department has even faced lawsuits seeking to block the loan forgiveness plan because of its potential tax implications.

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However, White House officials have countered that the plan is voluntary and borrowers can opt out if they don’t want to take part.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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