For many borrowers in the USA who owe money on student loans, there will be a huge amount of relief coming this year, which could be a big financial plus.
For those who are eligible, as much as 20,000 dollars could be cleared from the account in the name of student loan forgiveness.
As well as this possible cancellation, for those who paid money back during the moratorium on student loan repayments that came into effect during the COVID-19 pandemic, a refund can be requested from the loan servicer.
If you’re not eligible for the student loan forgiveness, or if you’ll still owe money after the debt is cancelled, even then you won’t have to make a payment until January 2023.
How do you cancel student loan debt?
There are some people whose student loan debt will automatically be forgiven without needing to take action but the majority will need to apply. Working out whether you are eligible for this scheme is the first step.
Under president Joe Biden‘s plan, the Department of Education will cancel up to 10,000 dollars in federal student loan debt for individual borrowers who make below 125,000 dollars per year or less than 250,000 dollars for married borrowers or those who are heads of households.
You may also be eligible for an additional 10,000 dollars in relief if you received federal Pell Grants while enrolled in college.
If the Department of Education does not have your income information, it will automatically cancel your debt and no application will need to be made.
For those who have already provided the information, you must complete a new application from the Biden administration to supply the information the department needs to cancel your debt.
In an August 26 press briefing, National Economic Council Deputy Director Bharat Ramamurti said that the application for student debt forgiveness will go live in early October.
He also said that, after borrowers complete their applications, they can expect relief “within four to six weeks”.
“Borrowers are advised to apply by roughly November 15, in order to receive relief before the payment pause expires on December 31,” Ramamurti said.