The excitement for many around student loan forgiveness has started to fade, and the questions are starting to form. The biggest question for many is, when can I apply? Millions of borrowers should be able to start their application as early as next month if their loan hasn’t already been forgiven. Let’s look a few key dates to be aware of.
Key Date One: The first key date is not specific, but general, and that is early October. The U.S. Department of Education (USDE) is planning to have a simplified forgiveness application ready by this time. For now, the USDE suggests signing up on their site for updates. Now, there is one fly in the ointment with this relief. Recently, Republicans have hinted that they may bring legal action against loan forgiveness (CNBC, Sept. 1, 2022). This means, if you have a balance, apply as early as possible. It’s likely that if a lawsuit should progress, any loan forgiveness prior to a ruling should still be valid. So, get your loan records, income records, and any other items you feel may be useful and be ready to apply as soon as the application is available.
Key Date Two: November 15 is the next date to know. The USDE is claiming it could take up to six weeks for an application to be processed. So, if you want to wrap this up and have that debt off of your personal balance sheet by December 31, start as soon as you can but apply no later than November 15. Keep in mind that even six weeks isn’t a guarantee. Applying as early as possible is best. One last point to keep in mind for this key date, if your application is not processed prior to or by December 31, payments resume January 1, 2023. You need to be ready to make that payment if your loan is not forgiven by then.
Key Date Three: December 31is the next key date. The Biden administration has extended the payment pause until December 31 of this year. This is reportedly the last student loan payment pause. Regular payments for those with remaining balances resume January 1, 2023. For example, let’s say you have $12,000 in qualifying student loans (no Pell Grants). Next, assume that your income and situation allow you to qualify for the maximum $10,000 in forgiveness. You still have a $2,000 balance and should have a new payment for that remaining balance which will commence January 1, 2023. Be ready to make a payment if you are in this situation.
Key Date Four: December 31, 2023 is the final key date to be aware of. As it stands now, the USDE is saying that this is the final date to apply for loan forgiveness should you be eligible but not able to submit an application this year.
Be alert, look for updates, and be ready to file your application once it’s available in October. Opportunities for this level of debt forgiveness rarely come along. Take full advantage of what you are entitled to receive if you have a qualifying student loan.
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