MORGANTOWN — Early this week the White House announced that the federal student loan debt relief application is available online.
You’ll find the link to the application at studentaid.gov. It’s available for desktop and mobile devices, in English and Spanish.
As studentaid.gov notes, the process takes five minutes or less and no login or documents are needed. You must apply no later than Dec. 31, 2023 — which gives you a little over a full year.
The application is fairly simple. You supply your name, Social Security number, birthdate, phone number and email.
You will be required to affirm one of the following conditions existed during calendar years 2020 or 2021. You:
• Made less than the required income to file federal taxes
• Filed as a single tax-filer and made less than $125,000
• Were married, filed taxes separately and made less than $125,000
• Were married, filed taxes jointly and made less than $250,000; filed as a head of household and made less than $250,000; filed as a qualifying widow(er) and made less than $250,000.
You will receive an email notifying you that your application has been received.
You will see at the end of the application process and in the confirmation email a description of the next steps.
The U.S Department of Education will process your application, determine your eligibility for debt relief, and work with your loan servicer to process your relief. Unless you hear back from the DOE or your loan servicer, you don’t have to take any other action.
DOE will contact you via email if it needs additional information. That might include additional documentation to verify your income; information about your parents’ income if you were enrolled as a dependent student anytime from July 1, 2021 to June 30, 2022; or DOE can’t match you to its loan records based on the information provided in your application.
DOE will notify you when your application has been approved and sent to your loan servicer to process your debt relief. Your loan servicer will notify you when your debt relief has been applied and will share any additional information, such as updates to your outstanding loan balance and updated monthly payment amount if you still have a balance.
Studentaid.gov cautions about scams. It says you might be contacted by a company saying it will help you get loan discharge, forgiveness, cancellation, or debt relief for a fee. DOE emphasizes that you never have to pay for help with your federal student aid. Make sure you work only with the DOE and its loan servicers, and never reveal your personal information or account password to anyone.
DOE emails to borrowers come from firstname.lastname@example.org, email@example.com, or firstname.lastname@example.org. You can report scam attempts to the Federal Trade Commission by calling 877-382-4357 or by visiting reportfraud.ftc.gov.
The forgiveness program
The Dominion Post described President Biden’s forgiveness plan extensively in a Sept. 18 story. Here are some of the highlights.
The program will offer relief of $10,000 or, for those with Pell Grants, $20,000. The income threshold is $125,000 for individuals or married filing separately; or $250,000 for married filing jointly or head of household.
A parent who has taken out loans — including loans for their own studies or parent PLUS loans for their child — may qualify for debt relief if they meet the income-eligibility criteria. If a parent also received a Pell Grant for their own studies, then the parent borrower may be eligible for up to $20,000 in relief on their loans. Otherwise, the parent borrower may be eligible for up to $10,000 in debt relief.
However, a parent who carries a PLUS loan and has a child with a Pell Grant may only receive relief for their own debt, not the child’s. If a dependent student received a Pell Grant, up to $20,000 in debt relief will be applied to the student’s loans — not to any loans their parent may have taken out.
Private, non-federal loans are not eligible for debt relief. If you consolidated federal loans into a private loan, the consolidated private loan is not eligible for debt relief.
One-time student loan debt relief will not be subject to federal income taxes. State and local tax implications will vary.
Loan balances remaining after relief will be re-amortized, meaning ED will recalculate your monthly payment based on your new balance, potentially reducing your monthly payment. Your loan servicer will communicate your new payment amount to you.
In a recent speech, Biden said more than 40 million people stand to benefit from the program, with 90% of them earning less than $75,000. “Not a dime will go to those in the top 5% income bracket. … This is a game changer for millions of Americans.”
The Committee for a Responsible Federal Budget estimates that the debt cancellation will eliminate $525 billion of federal student loan debt. They project that the overall amount of outstanding federal student loan debt will return to $1.6 trillion, its current level, in 2028.
Biden asserted, again, in his speech that the government can afford the program because of “historic debt reduction” already underway. He accused Republicans of trying to block it.
Critics have said it’s unfair to those who’ve paid their loans, saddles those who’ve paid and those who never took loans with debt they don’t deserve; will add to the national debt and stir more inflation; and is outside the president’s purview.
As we noted in September, U.S. House Speaker Nancy Pelosi was among those who’ve done a U-turn on the plan’s legality. She said in 2021: “People think that the president of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”
Then this past August she said she “didn’t know … what authority the president had to do this. And now clearly, it seems he has the authority to do this.”
The program faces a number of legal challenges. Among them, Politico and CNBC reported in September that a group of six GOP attorneys general sued to block it, arguing that it’s illegal and unconstitutional. They also argue that the policy would harm private companies that service some federal student loans by reducing their business.
CNBC reported that in late September, an attorney working for a conservative legal group sued, arguing that forgiveness would cause him personal injury in the form of a state tax bill.
News reports say the various legal challenges will likely slow implementation of the program, but the Biden administration is eyeing another monthly payment pause. Payments are currently on hold until January.
TWEET David Beard @dbeardtdp