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3 Steps to Take Now to Get Ready for Student Loan Forgiveness

Experts say there are a number of steps you should take now to get ready for the future. They recommend doing things like creating a budget, getting out of debt, and saving for retirement. By taking these steps now, you can set yourself up for a bright future.

September 21, 2022
8 minutes
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In a few weeks, many Americans may be able to apply for student loan forgiveness. This could be a great opportunity for those who are struggling to repay their loans.
The U.S. Department of Education has said that an application for federal student loans will be ready by “early October.” However, the department noted that the federal student loan system is notoriously complicated, so the application may not be as simple as hoped.

Experts say there are a number of steps you should take now to get ready for the future. They recommend doing things like creating a budget, getting out of debt, and saving for retirement. By taking these steps now, you can set yourself up for a bright future.

President Joe Biden announced in August that most federal student loan borrowers will be eligible for some forgiveness. Up to $10,000 will be forgiven for borrowers who didn’t receive a Pell Grant, and up to $20,000 will be forgiven for those who did. This is a great opportunity for many people to get some relief from their student loan debt.

To check if your financial aid package in college includes a Pell Grant, you can log into your account on Studentaid.gov and check under the “My Aid” section. According to higher education expert Mark Kantrowitz, most recipients come from families with incomes of less than $60,000.

The relief is also limited to individuals earning no more than $125,000 a year, or households making less than $250,000. This means that people who earn more than this amount will not be eligible for the relief.

The Education Department will be considering people's adjusted gross income (AGI) when making financial aid decisions. This may be different than what you see on your pay stub, so be sure to take that into account. To confirm your AGI for 2020 and 2021, look for line 11 on the front page of your tax return. This is known as Form 1040. If your income in either year was below the caps, you should be fine.

The majority of federal student loans are eligible for cancellation. This means that you may not have to repay your loan in full if you meet certain conditions. For example, you may be able to have your loan cancelled if you become disabled or if you die.

There are approximately 5 million borrowers with older student loans that are held by private companies, rather than the government. You can check your loan type at Studentaid.gov by going to the “My Aid” tab.

The Education Department has announced that it is taking steps to ensure that borrowers with private student loans also receive loan forgiveness, even though the department does not hold the debt itself. This is good news for borrowers who have been struggling to repay their loans, as it may provide some much-needed relief.

If you have multiple student loans, you may want to consider consolidating them into a single loan. This can help you qualify for loan forgiveness sooner.

If you have questions about loan forgiveness, it's important to reach out to your servicer as soon as possible, according to experts. By doing so, you can get the information and clarity you need to make the best decisions for your financial future.

As the deadlines for student loan payments approach, loan servicers are likely to be inundated with questions from borrowers. According to Mark Kantrowitz, a leading expert on student financial aid, borrowers should start contacting their loan servicers a few days before the deadline to avoid any last-minute surprises.

It's important to keep your contact information up to date with your servicer and the Education Department. You can do this at StudentAid.gov, according to Kantrowitz.
This will ensure that you are kept up to date on the latest information regarding the forgiveness process.

The Education Department has announced that borrowers can sign up for updates on its website while the application for loan cancellation is being prepared. This will allow borrowers to stay informed about the latest developments in the process.

Ideally, you'll be ready to request relief as soon as the application launches, experts say. This way, you can get the help you need as soon as possible.

The recent news that some Republicans may bring a legal challenge against student loan forgiveness means that the relief could be in jeopardy. However, if you get your loans forgiven before a lawsuit gets in the way, you might be able to keep it, according to Kantrowitz. Even if the courts rule against the Biden administration, you may still be able to keep your loan forgiveness. Kantrowitz advises borrowers to apply for forgiveness no later than Nov. 15.

The Education Department has announced that it will take up to six weeks for borrowers to have their loans cancelled after they apply. This means that if you want your balance reduced or eliminated by the time the pandemic-era payment pause on federal student loans expires on December 31, you need to apply as soon as possible.

According to Kantrowitz, if you are able to get your student loans forgiven, you will not have to make any payments on them. This can be a great way to avoid debt and save money.

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