Do you have federal student loans?
You probably have lots of questions right now.
The process may be automatic for some borrowers.
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Others will need to fill out an online system, which is expected to go live by early October.
Details on the nuts and bolts of thisexecutive ordercontinue to evolve.
Frequently Asked Questions About Student Loan Forgiveness
1. Who Qualifies for Student Loan Forgiveness?
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Borrowers who went to college onPell Grantscan receive $20,000 in forgiveness.
(Pell Grantsdont have to be repaid but are given based on financial need.)
Eligibility will be based on your adjusted gross income.
If your AGI was less than $125,000 for either 2020 or 2021, youre eligible.
Do you better Apply to Qualify for Loan Forgiveness?
Otherwise, youll need to fill out an system to receive federal student aid forgiveness.
The system is expected to go live onstudentaid.govby early October.
Once its available, the sooner it’s possible for you to submit your app, the better.
This is a first-of-its-kind program, so theres bound to be delays and hiccups.
Give yourself a buffer before the student loan pause ends Dec. 31.
Once you apply, it may takefour to six weeksbefore your student loan balance is adjusted.
Which Student Loans Dont Qualify for Forgiveness?
Private student loans dont qualify for forgiveness.
Some loans granted through federal programs may not either, especially those that werent eligible for thepayment pause.
Full details havent been released yet.
Its estimated that about 5 million borrowers have a commercially held FFEL loan.
If you have commercially-held FEEL loans, contact your loan servicer.
You may be able toconsolidate your FEEL loansinto the Direct Loan Program and benefit from cancellation.
Whats the First Thing I Need to Do if I Qualify for Student Loan Forgiveness?
Theyll reach out to you in coming weeks with more details about student loan forgiveness.
How to Call Your Federal Student Loan Provider
5.
Its Been a While.
What If I Dont Remember Who My Loan Servicer Is?
you could login tostudentaid.govto access all your loan information, including your servicer.
Will I Get a Refund if I Made Student Loan Payments During the Covid-19 Pause?
Yes, according to the U.S. Department of Education.
Details are still murky.
Studentaid.gov suggests contacting your loan servicer to request that yourpayments be refunded.
I Only Had the Pell Grant for a Year Or I Only Received a Partial Pell Grant.
Do I Still Qualify for the Full $20,000?
Yes, if you received a Pell Grant at any time, you qualify for forgiveness.
How Do I Find Out If I Had a Pell Grant in College?
Youll need to retrieve your login credentials if you havent signed in for a while.
Once youre in, hover over your name in the upper right hand corner and click Dashboard.
Does this Loan Forgiveness Apply to People Currently Enrolled in College?
Current students with loans are eligible for this debt relief, according toThe White House.
Dont expect widespread student loan relief like this again either.
Are Parent PLUS Loans Eligible for Forgiveness?
Yes, Parent PLUS qualify for student loan forgiveness.
Are Graduate Student Loans Eligible?
Yes, PLUS loans for graduate students are eligible.
Do I Still Qualify for Forgiveness, Even if I Didnt Finish My Degree?
Yes, you just have to have federal student loan debt and meet the income requirement.
Is It $10,000 in Forgiveness Per Borrower or Per Loan?
Student loan forgiveness is granted per borrower, not per loan.
Do I Qualify for Forgiveness if My Loans Were in Default?
The U.S. Department of Education is calling it a fresh start.
I Have More Than $10,000 or $20,000 in Loan Debt.
How Will My Monthly Bill Change Once Payments Resume?
Payments will be recalculated after the loan forgiveness is applied to your balance.
But details havent been released yet on how that will work.
If the cancellation wipes out a big part of your student debt, your monthly payment will likely shrink.
If you have a six-figure balance, your monthly payment probably wont get much smaller.
The Biden administration has proposed lowering the parameters for how income-based payments are calculated.
For example, borrowers pay 10% of their discretionary income now.
The new rule drops that percentage to 5%.
Will Student Loan Forgiveness Improve My Credit Score?
Fresh Start will last one year after payments resume.
Do I Have to Pay Federal Taxes on the Forgiven Debt?
No, youwont owe federal taxeson canceled student loan debt.
State income taxes may apply.
Are There Other Federal Student Loan Forgiveness Programs I May Be Eligible for?
you’re free to read up on all the federal student loan forgiveness programshere.
Its smart to reach out to your loan servicer to see if you qualify for any other programs.
They can also help you pick the best repayment plan for your budget and tell you how to apply.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
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