With the recent announcement made by the Biden administration regarding widespread student loan debt forgiveness, the Congressional Budget Office has estimated that approximately $400 billion in student loan debt is subject to this executive action. The announcement has left student loan borrowers wondering how they can apply to receive this debt relief.
The recent executive order cancels up to $10,000 of federal student loan debt issued on or before June 30, 2022, for borrowers whose income levels fall below specified limits. Borrowers are eligible if they make under $125,000 individually or $250,000 if they are married. An additional $10,000 of student loan forgiveness is available for borrowers who have also received at least one Pell grant.
If a borrower believes he or she is eligible for this federal student loan debt forgiveness, the U.S. Department of Education has encouraged borrowers to go to the site: studentaid.gov/debtrelief and sign up to receive alerts. These alerts will let borrowers know when the application portal opens. The portal is expected to go live in October 2022. Once the portal is live, borrowers will be asked to fill out an attestation form.
The Department of Education is estimating that it will take between four and six weeks to process the loan cancellations. It is recommended that borrowers apply by November 15, 2022, which is four to six weeks before the current pause on federal student loan payments will be lifted.
During this time, it is important to be aware of scams tied to current events like “pandemic grant” or “Biden loan forgiveness.”
Here are some examples of false claims you might come across:
- “Act immediately to qualify for student loan forgiveness before the program is discontinued.”
- “Your student loans may qualify for complete discharge. Enrollments are first come, first served.”
- “Student alerts: Your student loan is flagged for forgiveness pending verification. Call now!”
These communications, however, are not legitimate.
Though the U.S. Department of Education (ED) may reach out to highlight temporary programs like the limited PSLF waiver, aggressive advertising language like the above will not come from ED.
Even legitimate lenders have been accused of taking advantage of the confusion surrounding the program. If a legitimate lender attempts to refinance the borrower’s federal loans, this will change the composition of the loan from a federal loan to a private one and will make the borrower ineligible to receive student loan forgiveness.
Despite the legal challenges that are being threatened by Republican lawmakers, the Department of Education is moving forward with the program in October. The forgiveness program is expected to run through December 2023.
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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.