Over 45 million people owe some type of student loan, according to reports. Total student loan debt hovers around $2 Trillion. The Biden administration announced an enormous forgiveness program, and then redacted portions of the original announcement. The plan was for the government to distribute the same Executive Action that was used to fund all of the Covid stimulus programs in 2020 and 2021 to a majority student loan borrowers. There have been a number lawsuits filed challenging this constitutionality. But regardless of whether this is an attempt by the president to buy votes, or to ease the financial burden for student loan borrowers. The main question that all students want to know is “does I qualify?”
The program was designed to assist families with lower/middle-income. The “lower/middle-income” is defined as an individual earning less than $125,000 per year, or a household with a combined income of under $250,000. The Department of Education expects that 8 million borrowers will qualify for some form of forgiveness. The forgiveness is also limited to only $10,000 (or up to $20,000 for Pell Grant recipients, which is a means-tested grant for low income students). According to the DOE, the average student loan balance is just under $30,000. If you take $10,000 off your balance, this will only save you about $100 per month. Even though it’s nice to see a 5-digit reduction in the monthly payment, most borrowers will still pay over $200. The reduction from $300 to $200 may not be as helpful as one might think.
How can a borrower determine if they are eligible? The website of the student loan service provider is where borrowers should start. They should begin by visiting the website of their loan service provider, whether it’s FedLoan Servicing or SallieMae. The loan service providers will be able to provide the borrowers with all of the necessary tools and resources. The website Studentaid.gov has additional resources to determine eligibility and apply for the relief programs. To access the site, all borrowers must have an FSA ID. Act quickly to complete the application by October 31.
