For those who have watched their student loan debt grow over the years with no end in sight, the unique new student loan debt relief program could be life-changing.
In August, President Joe Biden announced a plan that offers partial loan cancellation for more than 43 million borrowers and would potentially eliminate loans for 20 million people. According to the Education Data Initiative, 770,000 Coloradans may be eligible for loan forgiveness.
“There’s a reason they called this the one time student loan debt relief,” said Jennifer Helgeson, director of compliance at the Office of Financial Aid at Metropolitan State University of Denver. “We will probably never see anything like this again, so we want everyone who is eligible to take the opportunity.”
Helgeson joined Michael Dino, a public finance expert and advocate, for a loan forgiveness panel at MSU Denver on Wednesday. “As a person who has been in the public policy environment for over 30 years, I think (loan forgiveness) is a good policy,” Dino said.
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These are important points to ensure that everyone who is eligible to benefit from the program receives debt relief.
Eligibility is broad.
- Almost all student loans are eligible. The exceptions are Pell Grants that are held by a university or private loans.
- Loans must have been taken before June 30 to qualify.
- Those who received federal Pell Grants can receive up to $20,000 in student debt relief. Those without federal Pell Grants can receive up to $10,000 in debt relief.
- If you don’t know or remember if you received a Federal Pell Grant, log on to StudentAid.gov and select “My Aid” from the drop-down menu under your name. In the scholarship section, you can view your Pell Grant history. If you received a Pell Grant before 1994, the website will not reflect your status; however, the Department of Education has this information and will apply the corresponding relief amounts.
- Borrowers with loans from the Department of Education are eligible for relief if their annual income is less than $125,000 for individuals or $250,000 for households.
- Payments made after August 24 that brought loan balances below the $10,000 and $20,000 thresholds must be repaid, though Dino says this may take some time.
- Residents of Mississippi, Minnesota, Wisconsin, Arkansas and North Carolina will be subject to state income taxes on the amount they received in student loan forgiveness, unless the laws of those states change to comply with the tax exemption federal student loans.
Applications will be online soon; apply early.
- Applications will be available in early October. Dino recommends applying by November 15 to ensure the debt is paid off before payments begin in January.
- That said, borrowers can apply for debt cancellation until December 31.
- Borrowers can expect to receive relief within four to six weeks of applying, although the Department of Education will be inundated with applications.
Support is available.
- Visit the debt relief website for information on the program. Once the application is active, borrowers can receive assistance by calling 1-833-932-3439.
- Borrowers can also sign up to receive an email when the application is open. Click on “NEW! Federal Student Loans Update.”
- Colorado has a statewide student loan ombudsman, Kelsey Lesco, at the state Attorney General’s Office to help with all student loan questions and concerns. You can reach her at 720-508-6975 or [email protected].
Student debt cancellation is just one aspect of Biden’s three-part plan to relieve student debt. Other initiatives, yet to be developed, include making the student loan system more manageable for current and future borrowers by cutting monthly payments in half for college loans and correcting the loan forgiveness program. for public service. The Biden administration also proposes to protect future students and taxpayers by lowering the cost of college and holding schools accountable when they raise tuition.
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Student debt relief has the potential to lift 7.5 million federal student loan borrowers out of default on their loans, giving a fresh start to those who have fallen behind.
“The caveat to this program is that there may still be a federal lawsuit filed by those who oppose the program, potentially creating an injunction on its distribution,” Dino noted. “That said, opponents have threatened to sue ever since the show was announced, and nothing has been brought forward yet.”