If you want to know how to apply for student debt relief, the application for one-time, federal student loan forgiveness is available now. President Joe Biden announced historic student loan relief for federal student loan borrowers that will eliminate nearly $400 billion of student loans. The good news is that the process to apply for student debt relief is simple and straightforward.
In this article, you will learn:
- Biden announces historic student debt relief
- How to apply for student debt relief
- Student debt relief: how to qualify
- Is student loan refinancing right for you?
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Biden announces historic student debt relief
In August 2022, Biden announced up to $20,000 of wide-scale student loan forgiveness for millions of student loan borrowers. As a result, approximately 20 million student loan borrowers will have all their federal student debt forgiven. Here are the key details of Biden’s plan.
- Up to $10,000 of student loan forgiveness for all eligible federal student loan borrowers
- Up to $20,000 of student loan forgiveness for student loan borrowers who had a Pell Grant in college
Since he was a presidential candidate in 2020, Biden has supported $10,000 of student loan forgiveness. He consistently urged Congress to enact wide-scale student loan cancellation, but Congress didn’t approve broad student loan relief. However, Biden used his executive authority under the HEROES Act of 2003 to cancel student loans as part of the Covid-19 emergency.
Biden has canceled more than $40 billion of student loans, particularly for student loan borrowers who are pursuing public service loan forgiveness, have a total and permanent disability or who received student loan forgiveness through borrower defense to repayment.
(Read: The Ultimate Guide To Student Loan Forgiveness)
How to apply for student debt relief
The application to apply for student debt relief is available now and be accessed through Federal Student Aid.
The process for how to apply for student debt relief is simple:
- Step 1: Visit Federal Student Aid to access the application.
- Step 2: Complete the Borrower Information section.
- Step 3: Review and certify you meet the requirements.
- Step 4: Submit your application for student loan forgiveness.
You don’t need to log in to Federal Student Aid to apply for this one-time student loan forgiveness. Rather, the application is easily accessible online at Federal Student Aid. You will be asked to provide basic personal information such as your name, Social Security Number, phone number and email. The application should take less than five minutes to complete.
Once you submit your application, the U.S. Department of Education will review your request and ensure that you meet all the qualifications. Your student loan servicer will notify you when your student debt relief has been processed. You should apply as soon as possible for student debt relief but definitely before December 31, 2023.
Student loan cancellation: how to qualify
To qualify for this student loan cancellation, student loan borrowers will need to meet the following qualifications:
- You must be a student loan borrower with a federal student loan that is owned by the U.S. Department of Education; and
- You are an individual who earned up to $125,000 of annual adjusted gross income in 2020 or 2021; or
- Your family earned up to $250,000 of annual adjusted gross income in 2020 or 2021.
Make sure that your federal student loan is owned by the federal government. For example, most FFELP Loans and Perkins Loans are owned by third party investors, financial institutions and colleges and universities.
(Learn more: How to pay off $100,000 of student loans)
Is student loan refinancing right for you?
If you qualify for student debt relief, you could get up to $20,000 of student loan forgiveness. For many student loan borrowers, this student loan forgiveness is life-changing. However, what if you have private student loans? What if you have $50,000 of federal student loans? For example, in these cases, you could still have student loans remaining even after this one-time student loan forgiveness.
So, you may be wondering, “Is student loan refinancing right for you?” It’s important to evaluate all your options, including student loan refinancing, income-driven repayment and other options for student loan forgiveness. For example, private student loans don’t qualify for federal student loan forgiveness. If you want to pay off student loans faster and get out of debt, then student loan refinancing can be a smart option for you.
With student loan refinancing, you can get a lower interest rate, lower monthly payment or both. When you refinance student loans, you get a new student loan that is used to pay off your old student loans. Student loan refinance helps you choose a new student loan repayment term from 5 to 20 years as well as a fixed or variable interest rate. You can refinance private student loans, federal student loans or both.
If you’re pursuing public service loan forgiveness, income-driven repayment or need forbearance or deferment, then refinancing federal student loans may not be your best strategy. However, you can refinance private student loans since they don’t qualify for student loan forgiveness.
How much can you save with student loan refinancing? This student loan refinancing calculator shows you how much you can save.
For example, let’s assume you have $70,000 of student loans, an 8% interest rate and a 10-year repayment term. If you refinance student loans and get a 3.5% interest rate and 10-year repayment term, your new monthly payment will be $692, you can save $157 each month, and you can save $18,851 over the life of your student loan.
(Learn more: How to pay off student loans)
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