The US Department of Education has officially launched President Joe Biden said Monday at the White House., allowing millions of borrowers to apply for up to $10,000 in student loans forgiven – or $20,000 if they have Pell Grants. More than 8 million people have already requested the cancellation of their debt,
But not all loans are included in the plan: Borrowers whose loans are administered under the now-defunct federal Family Education Loans program or who have Perkins loans are no longer eligible. federal debt relief.
The policy change, which revokes the eligibility of about 770,000 borrowers, came shortly after half a dozen Republican-led states filed legal challenges to the pardon plan.
What types of loans are and are not covered by the plan? What options do you have? Keep reading to find out.
Learn more about student loan forgivenessfind out how to request reimbursement of loan repayments made during the pandemic,and whether you will be liable for taxes on canceled student debt. Here is also .
What kinds of student loans aren’t covered by Biden’s student debt cancellation plan?
Generally speaking, private student loans are not included in the program — including federal loans held by private banks, unless they have already been consolidated through the government’s direct lending program.
On September 29, the Department of Education released a statement explaining that federal loans for family education were among those not eligible for rebate.
Discontinued in 2010, the FFEL program allowed private lenders to issue and administer federally guaranteed loans. While there are more than 4 million Americans with commercially held FFEL loans, a Biden official told CNN, the updated policy would only affect about 770,000 of them.
Perkins Loans and Health Education Assistance Loans, both administered by private institutions, are also excluded from the debt cancellation plan.
The Department of Education is “evaluating whether there are alternative avenues to provide relief to borrowers with federal student loans not held by ED,” according to the department’s website.
The new guidelines appear to address a key element of a lawsuit filed in October by six Republican-led states – Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina – which alleges the plan of the White House would financially burden the Missouri loans department because it holds FFEL loans.
Will private loans be included later in the administration’s debt cancellation plan?
In an Oct. 17 address announcing the official launch of the app, Education Secretary Miguel Cardona said the administration is looking at ways to include private student loan debt: [with privately help debt]but we are acting as quickly as possible to help as many people as possible. »
What types of loans are eligible for debt forgiveness?
Most federal student loans are eligible for $10,000 forgiveness, including William D. Ford Federal Direct Loan Program loans (direct loan), defaulted loans, and FFEL and Perkins loans held by the Department of Education.
Borrowers with the private FFEL program and Perkins loans who applied to consolidate into the direct lending program before Thursday are also still eligible for a one-time discount.
Recipients of Pell Grants are eligible for $20,000 rebate.
To qualify for debt forgiveness under the Biden-Harris plan, individual borrowers must have earned less than $125,000 in 2020 or 2021, while married couples and heads of households have a salary cap of $250,000. $.
How do I apply for student debt forgiveness?
When the Biden administration announced its student loan plan in August, it said borrowers. On Monday, October 17, the has officially gone live, having been in beta testing over the weekend.
The White House said applications will be accepted but no debt will be canceled until October 23, 2022.
Up to 8 million borrowers enrolled in income-driven loan repayment plans canalthough analysts still recommend filling out the forms.
“With any new government program, there is a risk of glitches, so it’s best to apply just in case,” financial aid expert Mark Kantrowitz told CNBC.
Read more: What you need to know about filling out FAFSA forms