The Department of Education has shut off new applications for student debt relief. Its plan to cancel up to $20,000 in student debt for federal borrowers has hit legal snarls.
Visitors to the site today find this message from the Department of Education:
“Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications. We are seeking to overturn those orders. If you’ve already applied, we’ll hold your application.”
Besides the two legal restraints now facing debt cancellation, a number of other lawsuits remain on court calendars. Any one of them could further delay reopening of the application or delivery of debt relief.
Do I make my payments in January or not?
There’s no certainty in any date previously provided for debt relief — except the one that resumes federal student loan payments in January 2023. There is speculation that the Biden administration may extend the forbearance on federal student loan payments even further.
Until that happens, you should plan to make payments in January, even if your balance would have been erased by debt cancellation.
If you sought a refund of payments made during the pandemic — when you were not required to make payments — that amount will be added to your current loan balance, and you will make payments on that total.
The timeline below was provided before the education department halted new applications.
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Mid-November: Date you must submit an application if you want to ensure you receive relief before payments restart in January.
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Jan. 1. 2023: Payments resume on federal student loans.
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Dec. 31, 2023: The student loan debt relief application deadline.
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March 31, 2024: Proof-of-income submission deadline.
What will I need to apply for student loan cancellation?
Not everyone has to apply to get student loan cancellation. Nearly 8 million federal borrowers will receive relief automatically because they are enrolled in an income-driven repayment plan; their income information is on file with the Department of Education. All other eligible borrowers will need to submit an application to see their balances drop by as much as $20,000.
The application requires:
• Social Security Number.
You must also verify that you will provide proof of income to the education department by March 31, 2024. And you must agree that you certify all of the information you submit is true under penalty of perjury.
When you do submit proof of income, you must include one of the following:
• IRS Form 1040 (tax return) from 2020 or 2021.
• If you didn’t file taxes: IRS Verification of Non-filing letter from 2020 or 2021.
Here’s what else we know about the application process:
Who qualifies for student loan cancellation?
There has been confusion about who is and isn’t eligible for relief. Here’s a refresher:
Those eligible for up to $10,000 in relief:
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For 2020 or 2021, your income must be below $125,000 if filing individually or $250,000 if filing jointly.
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Did not receive a Pell Grant during college.
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Have 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.
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Your loans must have been disbursed by June 30, 2022.
Those eligible for up to $20,000 in relief:
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The requirements above except for not receiving a Pell Grant.
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Only undergraduate debt is eligible for the additional $10,000 in cancellation.
Those ineligible for relief:
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Have private student loans.
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Have commercially held FFELP loans. However, those who applied to consolidate their debt before Sept. 29, 2022, would qualify.
Who gets automatic student debt relief?
Only borrowers already enrolled in income-driven repayment plans are eligible for automatic relief. These borrowers will receive notification of their eligibility by the education department. Those who would like to see their relief processed sooner can apply now.
How to opt out of student debt relief
Those…
Read More: Education Department Halts New Student Loan Debt Relief Applications