Big things are coming from the US Department of Education for student-loan relief to millions of borrowers. After a Supreme Court decision axed its far-reaching forgiveness plan, the Biden administration rolled out new efforts to help the legions saddled with student debt. As the Department of Education sent emails to some 25 million borrowers with information about potential loan forgiveness, many have asked: “Am I qualified to receive that relief too?”
Understanding the new relief initiative
The Department of Education, since the early days of August 2024, has started emailing borrowers with outstanding federally held student loans to alert them to possible debt relief. This is a broader initiative toward easing burdens on the borrowers, specifically those who have been struggling for years to make repayments or have been aggrieved by high rates of interest that inflated the loan balances. Emails and letters would be sent for updates on eligibility criteria and next steps; however, one must consider that an email does not guarantee qualification for forgiveness.
Eligibility criteria for forgiveness
The eligibility criteria to establish whether or not a person is qualified for student loan forgiveness under the plans are those specifically stipulated by the Department of Education. Several classes of borrowers might be eligible for relief under the proposed rules:
- Increasing loan amount: If you have a larger loan balance today than at the time you began repayment because of accrued interest, then you are eligible for forgiveness. This provision alone could affect an estimated 23 million borrowers, mostly Pell Grant recipients.
- Long-term repayment borrowers: Any borrower who has actually been in repayment status for over 20 years for their undergraduate loan or over 25 years for their graduate loan is also eligible. This will involve those borrowers who took out loans before particular cutoff dates.
- Eligible for Forgiveness but Not Applied: If you are eligible for forgiveness under existing programs but not applied, including those eligible for IDR or other discharge options, you may be able to automatically get relief.
- Borrowers from Low-Value Programs: If a borrower attended an institution that did not provide adequate financial value or met the accountability standards set by the Department, then they could also be eligible for debt relief.
How you can check your eligibility
Check if you have federal student loans first. Next, determine eligibility for forgiveness based on the steps described below:
- Log into StudentAid.gov to view your account: Log in using your FSA ID to be able to view the loan details. This way, you can verify that your loans are federally held.
- Know the type of loans you have: Make sure your loans can be forgiven. Some types, like commercially held Federal Family Education Loans or Perkins loans, may need to be consolidated into Direct Loans in order to be eligible for forgiveness programs.
- Know the Forgiveness Programs available: Know the different forgiveness options available, such as the Public Service Loan Forgiveness Program, which forgives loans after 120 qualifying payments while working for a qualifying employer. Also, note that some income-driven repayment plans lead to forgiveness after 20 to 25 years of payments.
Borrower’s next steps
As the Department of Education is finalizing the rules for this relief initiative, borrowers should be watching their email inboxes from the Department of Education. This will include emails with details on eligibility criteria and next steps. If you want to opt out of forgiveness, you must notify your loan servicer no later than August 30, 2024, and if you opt out, you cannot change your mind or opt back in at that time.
