When will student loan relief applications open?

WASHINGTON — It’s been one week since President Joe Biden announced his long awaited student loan forgiveness plan, promising to wipe out debt to millions of Americans who attended college. Upon the news, many flocked to their accounts to see how they could apply for the loan forgiveness program but were unable to. On Tuesday, the latest White House briefing revealed a set date for applications to go live in about two months.

Here’s what we know so far about applying for a loan dismissal. Bharat Ramamurti, deputy director of the National Economic Council, said Tuesday that applications are expected to open by mid-October. Borrowers should expect loan adjustments as soon as four to six weeks after completing the application.

Ramamurti suggested that those looking wanting loan relief should apply by roughly Nov. 15 in order to see an adjusted amount before the payment pause ends on Dec. 31.

This is not to say the Department of Education won’t keep processing applications as even after the pause expires. Loan relief will be offered to those who are eligible until Dec. 31, 2023.

Borrowers anxious to apply for student loan dismissals should head to StudentAid. gov and sign up an email address to be notified when applications open. Some won’t have to go through the process of applying for student relief.

About 8 million borrowers will see their loans adjusted automatically thanks to the Education Department having their information on file. RELATED: You can’t apply for new student loan forgiveness yet, but you can sign up for alerts With just days left before the payment pause extension was due to expire, President Joe Biden announced his student loan forgiveness plan. The Biden administration is delivering on a campaign promise to tackle the problem of student debt for millions of Americans.

With his plan, the administration is erasing up to $10,000 in federal student loan debt for those with incomes below $125,000 a year, or households that earn less than $250,000. The plan also cancels an additional $10,000 for those who received federal Pell Grants to attend college. “Our estimate is that the debt relief proposal will reduce average annual receipts in the student loan program by about $24 billion a year over the next 10 years,” Ramamurti said on Tuesday.

RELATED: How is Biden able to forgive student loans? Pell Grant recipients, who will receive $20,000 in student debt forgiveness if they meet the income requirements, make up more than 60% of the student loan borrower population, according to the White House. The Department of Education estimates that roughly 27 million borrowers with Pell Grants will be eligible for up to $20,000 in student debt relief. Pell Grants are usually awarded to undergraduate students who “display exceptional financial need.

” Unlike loans, Pell Grants do not have to be repaid except under certain circumstances . The amount a borrower receives through a federal Pell Grant award is based on their Expected Family Contribution, cost of attendance at their school, status as a full or part-time student, and plans to attend school for a full academic year or less. Pell Grant amounts change yearly and the maximum award for the 2022-2023 school year is $6,895.

A borrower’s school can apply Pell Grant funds directly to their costs, pay the borrower directly, or combine these methods, the Department of Education said. Borrowers who paid between March 13, 2020, and Aug. 23, 2022, and now owe less than the $10,000-$20,000 threshold, can request a refund for the full amount forgiven.

Any amount paid after Aug. 24, 2022 that brings a borrower below the threshold will automatically be refunded without the borrower requesting it. RELATED: Yes, you can get a refund if you paid federal student loans during the payment pause Parent PLUS loans, which are issued to parents of dependent undergraduate students, are meant to supplement other financial aid offers.

These borrowers are eligible for student loan forgiveness, senior Biden administration officials told VERIFY reporters. Parents with these loans and students are each eligible for debt forgiveness, the Department of Education confirmed in an email to VERIFY. “If both the student and the parent received a Federal Pell Grant, each person would be eligible to receive the additional $10,000 in debt cancellation,” the department added.

Additionally, federal graduate loans are also eligible for forgiveness if the loans are held by the Department of Education, according to experts. “We have confirmed that graduate student borrowers will be included in this cancellation,” said Jessica Thompson, vice president at the Institute for College Access and Success. “So again: same income thresholds, same amounts.

” However, private student loans are not eligible for forgiveness. RELATED: Fast Facts about student loan forgiveness People will not pay federal taxes on student loan forgiveness, but states could decide to tax money forgiven by the federal government as income. The American Rescue Plan Act (ARPA) of 2021 was passed in March 2021 as part of a COVID-19 relief package that stipulated any debt forgiven from Dec.

21, 2020 to Jan. 1, 2026 will not count as income. This means eligible borrowers don’t have to pay federal taxes on any student loan forgiveness through Dec.

31, 2025, Andrew Lautz, National Taxpayers Union Foundation’s director of federal policy, told VERIFY. States that tax income could theoretically charge borrowers state income taxes on forgiveness, but some already agreed to exclude student loan forgiveness from taxation. .