How to apply Biden’s new student loan relief plan. The Biden Administration’s move to cancel student loans has recently been making headlines online. Yay! Who doesn’t enjoy receiving financial aid? Especially when it comes from a president who is concerned for the wellbeing of this nation.
Students in the United States have worked very hard in order to lead better lives. They work hard over the years, not only to earn good marks but also pay their tuition and other fees. Due to their outstanding work, they accrue debt to their universities, banks, and any other institutions that provided loans to them.
A momentous statement involving the cancellation of up to $20,000 in student loan debt for millions of Americans was made by President Biden on Wednesday. Biden claims that the new strategy will enable the full cancellation of debt for close to 20 million people.
An entire generation is currently overextended with unmanageable debt in exchange for the opportunity to at least attempt to earn a college degree.
As he explained the proposal that will have an effect on the almost 43 million Americans who have federal student loan debt, Biden stated that even if you graduate, you might not be able to live the middle-class lifestyle that a college degree has historically made feasible.
However, this loan forgiveness program does not apply to private student loan debtors, who, according to MeasureOne research from 2021, account for an estimated 8% of all outstanding student loan debt in the U.S.
If this describes you, you might want to investigate other ways to reduce spending, such as refinancing student loans.
President Biden’s New Student Loan Relief Plan: Eligibility
Who qualifies for the student loan cancellation proposal from Biden?
Before you even consider applying for student loan forgiveness under the new Biden administration program, be sure you actually qualify. The conditions that you must meet are listed below.
- You currently have a federal student loan.
- You and the members of your family do not earn more than $125,000 per year.
- You receive Pell Grants while the Department of Education holds your loans (this is required for additional forgiveness).
If none of the aforementioned choices apply to you or if you already have a private student loan, look into the options offered by private loan lenders.
A student loan refinance is a reasonable option if you want to save money in the long term. This procedure involves replacing your existing loan with a new one that may have a lower interest rate.
How to Apply for Biden’s Student Loan Cancellation Plan
If you match the aforementioned criteria, you are most likely eligible for student loan forgiveness under this new program. Remember that your assistance will be restricted to the amount outstanding. So, if your federal student loan is less than $10,000, you will not be eligible for any further funds.
Steps to Take
- Create an alert system
You should remember to fill out a request for forgiveness now that you are aware of your eligibility. You can register to get notifications from the Department of Education when the application opens.
- Submit a Request
Interested applicants will submit an application through the Department of Education, which will state the precise procedures you must follow. Obtain the necessary documentation so you’ll be ready when the application is made available. You will undoubtedly need to provide proof that you have federal student loan debt and meet the income standards.
The White House said in a statement that “the application will be available no later than when the pause on federal student loan repayments terminates at the end of the year.” The White House added that 8 million borrowers may be eligible for automatic relief since the Department of Education already has access to their financial records and income information.
According to the White House, the American Rescue Plan will prevent this debt relief from being considered taxable income for federal income tax purposes.
If you have any questions or doubts, you can check FAQs about the cancellation of student loans here..