Reports reveal that over 45 million people have some sort of student loan outstanding. The total student loan debt is hovering close to $2 Trillion (yes, with a T). The Biden administration announced a huge forgiveness program (and then redacted parts of the original declaration). The plan was to use the same Executive action that was used for all the Covid stimulus in 2020 and 2021 as a governmental distribution to wipe the slate for a majority of student loan borrowers. There are already a number of lawsuits challenging the constitutionality of this. But, regardless, whether someone believes this is the president's attempt to buy votes or ease the financial burden on student loan borrowers, the main question that all borrowers want to know is, "do I qualify?"
For starters, the forgiveness program is meant to help lower/middle income families. They define "lower/middle income" as individuals who earn under $125,000 per year or households with combined income under $250,000. According to the Department of Education, they expect about 8 million borrowers to qualify for some sort of forgiveness. Also, the forgiveness is only for up to $10,000 (or $20,000 for Pell Grant Recipients which is a means tested grant for low-income students). The DOE also states that the average balance for a student loan is a bit less than $30,000. Since most borrowers only pay the minimum required, if you remove $10,000 off the balance sheet, it will only save about $100 per month in payments. Though it will be nice to have that 5-digit reduction, the average borrower will still be paying over $200 per month for their payments. If someone is struggling with a $300 per month payment, the reduction to $200 per month may not help as much as they expect.
How does a borrower find out if they qualify? Borrowers need to start with the website of their student loan payment service provider. Whether it is FedLoan Servicing, SallieMae or any other loan service providers, they should start there. They will have the tools and resources to help borrowers navigate this program. The website studentaid.gov also has resources for determining eligibility and how to apply for the relief program. All borrowers will need an FSA ID to access this site. The application must be done by the end of October, so act quickly.