If you’ve scrolled through TikTok or Instagram lately, you’ve likely seen all different kinds of reactions about Biden’s student loan forgiveness plan.
Some are happy and some are frustrated. And many are just confused.
Despite all the coverage of Biden’s plan, borrowers still have more questions than answers. I know this, because I’ve received dozens of questions from readers on student loan forgiveness in the last week. I’ve been doing my best digging around for answers, but the questions keep on coming.
A reader wrote to me last week: “So happy about the news!” She immediately followed that thought with: “Definitely very curious about what the timeline will be for the application coming out and what kind of info the application will require.” If you have questions about federal student loans and happen to be reading this, check out our FAQ.
To recap what happened last week: President Biden laid out a sweeping plan to cancel up to $20,000 in federal student loan debt per borrower. To qualify for $20,000 of forgiveness, individuals must earn less than $125,000 a year, or less than $250,000 a year for couples, and must have received a Pell Grant (or multiple) in college. Borrowers who have other federal loans and meet those income requirements qualify for $10,000 of forgiveness. The Biden administration is also extending the federal student loan payment pause for a “final” time through Dec. 31, 2022.
So, it’s official. Now what? Well, naturally, borrowers want to know when they can expect their debt to be canceled. Borrowers (myself included) are eager for more information, but we do at least have a few important dates for student loan borrowers to keep in mind in the coming weeks and months. Here’s a quick overview:
- Early October: Student loan forgiveness applications go live
- Nov. 15, 2022: Apply for student loan forgiveness by this date to receive relief before end of the year
- Dec. 31, 2023: Student loan forgiveness application closes
The best way to deal with the uncertainty on how, exactly, student loan forgiveness will work is to stay up to date with the process. Keep your contact information updated with your loan servicer, sign up for email updates from the Department of Education (select “NEW!! Federal Student Loan Borrower Updates”), and follow my coverage on student loans.
The Bottom Line
Use this “final” extension of the student loan pause to prioritize other financial goals, like building an emergency fund, paying high-interest debt, or investing for the long term. Those are areas where you can make your money go further right now.