Do you or someone you love have student loans? Have you been helping someone make ends meet because their loan payment is causing financial hardship? While people think student loan forgiveness will only affect young adults, the truth is that we meet people preparing for retirement who are financially helping their children or grandchildren as they continue to make loan payments all the time. This means that loan forgiveness could impact their financial well being, too. It’s not as uncommon as you may think. Below are some common questions our Osiwala Financial Group advisors are being asked.

 

Does my loan qualify for the $10,000 or $20,000 of student loan forgiveness? 

First, you must qualify for the income threshold, but the Department of Education has said the loans that are eligible include:

  • Direct Loans (defaulted or non-defaulted)
  • Federal Family Education loans (also known as FFEL loans) held by the Education Department (defaulted or non-defaulted)
  • Federal Perkins Loans held by the Education Department (defaulted or non-defaulted)  
  • Defaulted FFEL Program Loans not held by Education Department
  • Defaulted HEAL Loans

Loans that are not qualified for forgiveness include:

  • Non-defaulted FFEL Loans not held by the Education Department
  • Federal Perkins Loans not held by the Education Department (defaulted or non-defaulted)
  • Non-defaulted HEAL Loans
  • Private Student Loans

To find out if your loan is a Federal Student Loan (which makes it qualified), the Department of Education says the borrower should log into their studentaid.gov account and click on the “Find Loan Service.” If the loan starts with “Department of Education,” you have a Federal Student Loan.

To qualify, you must have an annual income of less than $125,000 or less than $250,000 for married borrowers who file taxes jointly. Borrowers who are dependent students will be eligible for relief based on their parent’s income rather than their own.

 

How much in forgiveness am I eligible for?

Under this new program, you’ll have $20,000 of your Federal Student Loan debt forgiven if you’re a Pell Grant recipient. Other Federal Student Loan borrowers will get $10,000 of their debt canceled. This plan also includes a short extension of the forbearance program, and repayment of your Federal Student Loan will not begin until December 31, 2022. Additionally, your interest rate will stay at 0. 

 

Will I receive a refund if I’ve been paying my Federal Student Loan while deferred due to COVID? 

You can request a refund for payments made between March 13, 2020, and today’s date from your service loan provider since it was during the payment deferral program during COVID.

 

When can I apply for student loan forgiveness?

According to the Department of Education, the simple application for forgiveness will be available by early October.

 

Is there anything I can do in the meantime to prepare to apply for forgiveness?

The Department of Education says the borrower should log into their studentaid.gov account and ensure their contact information is current. If they do not have a studentaid.gov account, one should be created to manage the loan and, possibly, future forgiveness.

Additionally, double-check their loan servicer has the current contact information. If the borrower isn’t aware of who their loan servicer is, they should log into their studentaid.gov account and click on the “Loan Servicer” tab.