Biden’s Student Debt Relief Application Is Officially Live

The Department of Education (ED) has officially released the Biden Administration’s student loan debt relief application. The form is short and simple, requiring limited information from borrowers. There are also no documents for borrowers to upload to apply.

In a live address, President Biden said that the application had already handled 8 million applications. These applications came in over the weekend during a beta test of the application that went live on Friday evening. The beta test appeared to be an effort to ensure the application site would not crash because of high traffic.

When asked about the various lawsuits that have been filed to block the debt relief plan, Biden told reporters “Our legal judgment is that it won’t” be struck down by the courts.

The White House estimates that approximately 40 million borrowers will be eligible for debt relief, so handling 8 million applications during the beta test of the application form is a good sign that ED has successfully set up a system that can handle the volume of applications.

The application form will be open until the end of 2023, so borrowers have just over a year to apply. However, you must apply quickly if you want to ensure your loans are forgiven before repayments start on January 1, 2023. It will take 4-6 weeks for applications to be processed. So, borrowers will need to apply by mid-November to have their applications processed before repayments start.

Most borrowers will need to apply for student loan forgiveness. But ED has said that around 8 million borrowers will qualify for forgiveness automatically because their financial information is already on file from completing a FAFSA recently or certifying income for an income-driven repayment (IDR) plan.

Some borrowers will be asked to verify the income information they provide after they have submit an applications. The administration is estimating 1–5 million borrowers will need to provide proof of income after submitting an application.

Who Qualifies For Loan Forgiveness?

You are eligible for student loan forgiveness if your adjusted gross income (AGI) was less than $125,000 in either 2020 or 2020. For married couples who file their taxes jointly, your income needs to be under $250,000. Borrowers who received a Pell Grant in college will have $20,000 forgiven. Borrowers who did not receive a Pell Grant in college will receive $10,000 in forgiveness.

Pell Grants are a type of federal financial aid awarded to lower-income students to help pay for college expenses. If you are not sure whether you received a Pell Grant in college, you can go to studentaid.gov, log in and review “My Aid” in the menu options to see whether you received a Pell Grant or not.

What Types of Student Loan will be Forgiven?

Borrowers must have loans owned by the federal government to be eligible for forgiveness. These loans include what are known as Direct Loans, provided directly by the Federal government. All loans made since 2010 are Direct Loans, but borrowers with older loans could have Direct Loans or loans made under the Federal Family Education Loan (FFEL) program.

FFEL loans were made by banks but guaranteed by the federal government. Some of these loans are now owned by ED, and some are still owned by banks.

Parents who borrowed Parent PLUS loans to help pay for their child’s college expenses are also eligible for forgiveness.

All of the following loan types are eligible for forgiveness:

• William D. Ford Federal Direct Loan (Direct Loan) Program loans
• Federal Family Education Loan (FFEL) Program loans held by ED or in default at a guaranty agency
• Federal Perkins Loan Program loans held by ED
• Defaulted loans (includes ED-held or commercially serviced Subsidized Stafford, Unsubsidized Stafford, parent PLUS, and graduate PLUS; and Perkins loans held by ED)

Unfortunately, borrowers with loans not owned by ED are not eligible for forgiveness unless they applied to consolidate their loans before September 29, 2022. This includes FFEL and Perkins loans that ED does not own. The Biden administration has said it is in discussions with the private lenders that own these loans to see if they can still provide relief to borrowers.

If you are unsure what type of student loans you have, you can check on studentaid.gov. Go to the “My Aid” section and then the “Loan Breakdown” menu option. This will list all the loans you have received. Loans that start with the word “Direct” will qualify. For FFEL or Perkins loans, you need to check who the servicer is to figure out if it qualifies. You can find the name of your servicer by clicking on the “View Loan Details’ arrow beside the loan information. Servicer names that start “Dept. of Ed or “Default Management Collection System” are owned by ED and will qualify for forgiveness.

There were concerns that managing student debt relief might overstretch and already over-burdened Department of Education, so far, at least on the technical front it looks like those concerns were unwarranted. Hopefully, the debt relief process continues to run smoothly.