Senior administration officials say the Department of Education will then verify your eligibility using the credit and income information already on file. It sounds vague because it is! The department has revealed very few details about this process, but has said it will report any discrepancies. Borrowers who are flagged may be required to submit additional documentation to verify their income.
But if you don’t get flagged, the department says you probably won’t hear from them until your application is approved.
There’s no official timeline for when borrowers will be told whether or not they’ve been approved, but Education Secretary Miguel Cardona told NPR in September he hopes to process as many applications as possible before the federal student loan pause begins on Jan.
There are lawsuits against the plan. Is it possible that one of them could prevent the Department of Education from actually forgiving this debt?
It is possible. This is what the landscape looks like on Friday morning:
The administration achieved two legal successes at the end of last week. A case brought by a Wisconsin taxpayers group was dismissed by the Supreme Court. The other, which legal experts told NPR was probably the strongest case against debt relief, was dismissed by a federal judge in Missouri. However, that decision was immediately appealed, and within 24 hours a US Circuit Court of Appeals had ordered the debt relief to be temporarily suspended. It is unclear how long it will take for this case or any other cases that arise to resolve on their own.
Legal experts who spoke to NPR have differing views on what would happen if courts blocked the program after borrowers had already reduced their debt. However, most agreed that the government was very unlikely to reintroduce the debt.
What if I pay off some of my loans during the pandemic payment hiatus? can i get the money back
The guidance here from the Ministry of Education was confusing. First, the ministry suggested that borrowers should first ask their service providers for a refund and then apply for debt relief. Now, the guidance says borrowers whose loans are less than the relief they’re entitled to — either $10,000 or $20,000 — only need to submit one application, and the department says they will process the rest. These borrowers can expect an automatic refund of payments made during the pause, up to their owed relief amount.
The Ministry of Education gave an example in its guidance:
Let’s say you’re eligible for $10,000 in debt relief. If you currently owe $9,500, that relief amount will be applied to your loan(s). If you paid $1,000 during the payment pause, you’ll automatically be refunded $500—the remaining amount of your $10,000 debt relief.
Can I choose which loans are reduced first? What if I want a loan with a higher interest rate to be preferred?
The department says it will first relieve all defaulted loans and then target loans with the highest interest rates first.
Officials say they are trying to prioritize the loans that are causing the most harm to borrowers.
What if I am waiting for government loan forgiveness or PSLF? Should I just wait for that relief?
The short answer is: don’t wait. Apply for the relief even if you are still working toward PSLF.
Speaking of which, PSLF has an important deadline coming up. Last year, the administration opened up an exemption for borrowers who work in the public sector to apply to PSLF under new, more flexible rules. This week, the Department of Education made some of those changes permanent, but says borrowers should still apply for the waiver. It expires on Monday and is unlikely to be renewed. So if you have the opportunity to qualify for PSLF, apply here.
Are Federal Family Education Loans or FFEL eligible for relief under Biden’s plan?
FFEL loans held by private lenders are excluded from this credit relief plan. Not sure if your FFEL loans qualify? A good litmus test is: did you have to keep making payments during the pandemic hiatus? Have your interest rates continued to rise? If the answer to any of these questions is yes, it is because your loans are still held by one of these private lenders and do not qualify. If your payments have been suspended during the pandemic, you should be eligible. Only borrowers with Department of Education-managed loans were eligible for the pause.