Student loans: when to apply for up to $20,000 in student debt forgiven

A big relief is coming this year for many borrowers who owe money on student loans. As much as $20,000 in student loan debt may soon be removed from your account if you are eligible. In addition to cancellation, if you have made payments on your student loans during the moratorium, you can request a refund from your loan servicer. If you don’t qualify for student loan forgiveness — or if you still owe money after debt forgiveness — you will not have to make a payment until January 2023.

While some borrowers may have their debt automatically canceled by the Department of Education without taking further action, most will need to apply for forgiveness. We will explain below.

Keep reading to find out if you qualify for the Student Loan Debt Cancellation Plan and how to apply. Also, watch out for student loan forgiveness scams in spot those red flagsand here are the states tax canceled student loan debt.

First, find out if you qualify for student loan debt forgiveness

Under President Joe Biden’s plan, the Department of Education will forgive up to $10,000 in federal student loan debt for individual borrowers who earn less than $125,000 a year or less than $250,000 for married borrowers or those who are heads of households.

You may also be eligible for additional relief of $10,000 if you received Federal Pell Grants while attending college.

You may need to complete an application for student loan debt forgiveness

Whether you should apply for student loan debt forgiveness depends on whether the Department of Education already has your income information – this group of borrowers primarily includes those who are enrolled in income-based repayment plans.

If the department has your income data, it will automatically cancel your eligible debt. You won’t have to do anything more.

If the department does not have your income details, you must file a new application with the Biden administration to provide the information the department needs to cancel your debt.

Hand holding a stack of 100 dollar bills

You may qualify for $10,000 to $20,000 in student loan debt forgiveness.

James Martin/CNET

When will the debt forgiveness application be available?

At a press briefing on August 26, Deputy Director of the National Economic Council, Bharat Ramamurti, said the request for student debt cancellation would be posted online in beginning of October. He also said that once borrowers complete their applications, “they can expect relief within four to six weeks.”

“Borrowers are advised to apply before around November 15, in order to receive relief before the payment break expires on December 31,” Ramamurti said.

You can choose to be notified when the app becomes available by going to the Department of Education’s subscription page and signing up to receive “Federal Student Loan Borrower Updates”, the first box check off a long list of education-related topics.

We’ll update this story with more details when the app becomes available.

For more details on money, here’s what to do if you can’t pay your credit card bills on time. Also, here what could happen to your credit score if your student loans are cancelled.

About Judith J. George

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