In a move welcomed by millions, the Biden-Harris administration recently announced that the government would cancel a specific amount of federal student loan debt for qualified applicants. Although the administration's authority to enact this plan is being challenged in the courts, it's important for eligible borrowers to formally apply for relief. If the plan survives court challenges, these borrowers will benefit from significant loan reductions that could, in many cases, even wipe their student loan debt out.
Do I Qualify For Student Loan Cancellation?
If you're unsure of what kind of student loan debt you possess – federal or private, or both – contact your loan servicer(s) for clarification. Private loan debt cannot be forgiven under the Biden plan, as private companies own privately-held loans. Generally, only student loan debt owned by the government can be forgiven by the government.
If you both received a federal Pell Grant as part of your college loan package and you meet the administration's income thresholds, you'll qualify for $20,000 in debt relief. If you meet the administration's income thresholds but did not receive a Pell Grant as part of your federal loan package for college, you'll qualify for up to $10,000 in debt relief.
Note that loans disbursed on or later than July 1, 2022, are ineligible for relief under the Biden-Harris student loan forgiveness program. For your loans to be eligible for relief, they will need to have been disbursed prior to this date.
The loan income thresholds are calculated based on a borrower's 2020 and/or 2021 tax return(s). Individuals qualify for relief if they earn less than $125,000 in income; married couples qualify if they make less than $250,000 in income annually. For the purposes of relief, "income" refers to a borrower's adjusted gross income (AGI), not their total income. If you've filed a 1040 for 2020 or 2021, see line 11 to view your AGI. You qualify for relief if you meet the income threshold for either 2020 or 2021. You don't need to meet this threshold for both years in order to qualify.
Current and recently graduated students who are still classified as dependent students may be eligible for relief. Note that if you’re still classified as a dependent student, you’ll need to provide your parents’ AGI, not your own, when citing your eligibility for relief.
Applying For Relief
Traditionally, it is a near-impossible task to have one’s student loans forgiven outright. These loans aren’t even generally dischargeable in bankruptcy, absent truly extreme circumstances. While our firm has successfully assisted many borrowers in getting their loans modified and their balances reduced, the Biden-Harris plan is unique in that it forgives student loan amounts en masse. As a result of this unprecedented opportunity for debt relief, you’ll want to apply for student loan cancellation quickly if you qualify for this program. This opportunity hasn't arisen before, and – given the amount of pushback the administration is receiving in the wake of announcing the plan – it is unlikely to come around again any time soon.
To apply for student loan relief, you'll need to complete an online application that takes roughly five minutes to fill out. You won't need to provide supporting documentation when filling out the online form. Note that there is not yet a paper version of this application available, but the administration has announced that it will be making one available soon for those borrowers who can't or prefer not to apply online.
On your application, you’ll need to specify that you hold one or more of these types of loans that qualify for relief:
- Federal Direct Loan (Direct Loan) Program loans
- Federal Family Education Loan (FFEL) Program loans
- Federal Perkins Loan Program loans
- Defaulted loans: Including Subsidized Stafford, Unsubsidized Stafford, parent PLUS, Graduate PLUS, and Perkins loans
Remember, only those loans held by the U.S. Department of Education – including those held by the Department and serviced commercially – qualify for relief.
An Evolving Situation
If you're eligible for relief under this plan, applying for that relief as quickly as possible is critical. Two significant developments have already impacted the forgiveness program since it was announced, and chances are that this situation will continue to evolve.
In late September, as legal challenges to the program were filed in courts across the U.S., the administration scaled back the loan types that qualify for relief. Under the original terms of the plan, borrowers with privately held federal student loans were eligible for relief as long as they had consolidated their loans into the Direct Loan program. However, when the U.S. Department of Education updated its guidance, it barred those borrowers with privately held FFEL and Perkins loans from obtaining relief unless they consolidated their loans prior to September 29, 2022. It is estimated that between 700,000 and 800,000 borrowers lost their eligibility for relief after this shift was announced.
Then, in late October, the Eighth Circuit Court of Appeals temporarily blocked the plan after six states – Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina – filed a lawsuit insisting that the administration lacks the authority to implement the plan. Borrowers can still apply for relief, but the plan will need to survive challenges in the courts before it can be implemented.
If you're eligible for relief, you'll want to apply for that relief quickly in case some time-barred approach is instituted as a result of the court challenges. Additionally, you'll want to regularly check the news for updates about how this situation is evolving.
Contact A Knowledgeable New York Debt Relief Attorney To Learn More
If you have questions about student loans, debt relief, consolidation, and debt management issues, connect with our firm today. We're proud to offer a free legal consultation to anyone struggling with debt and interested in learning more about their rights and options under the law. To schedule your free initial case evaluation, contact the Law Office of Simon Goldenberg, PLLC, by calling 888-301-0584 or connecting with us online. We look forward to assisting you.