What we know so far about the student loan forgiveness application coming soon from the Education Department

Delmaine Donson | E+ | Getty Images

The U.S. Department of Education has said that its student loan forgiveness application will go live in “early October.”

Yet it’s nearly halfway through the month, and borrowers still can’t apply.

Still, the White House has shared new information on what people can expect from the form. Here’s what we know as of now.

1. Application should still go live in October

The White House continues to say that the form will be available this month; however, it won’t begin canceling the loans until after Oct. 23, a delay caused by the ongoing legal challenges that have been brought against the Biden administration’s plan.

2. No documentation will be required

According to the Biden administration, borrowers will be able to self-attest that they meet the requirements to qualify for forgiveness and they won’t need to attach any proof to their application.

The relief is limited to people who made less than $125,000, or married couples or heads of households who earned under $250,000, in either 2020 or 2021.

More from Personal Finance:
Who benefits most from expanded earned income tax credit
Parents who missed child tax credit still have time to claim it
Optimism monthly child tax credit checks can be renewed

Review your recent tax returns to confirm that your income fell below those thresholds in one of those years. The Education Department will be considering people’s so-called adjusted gross income, or AGI, which may be different than your gross salary. To confirm your AGI for 2020 and 2021, look for line 11 on the front page of your federal tax return, which is known as Form 1040

The White House also says borrowers won’t need their FSA ID to apply for forgiveness and that they can request the cancellation on a desktop computer or on their mobile phone.

You will need to provide your Social Security number.

3. Some borrowers may need to verify income

Although you won’t be asked prove your income on the main forgiveness application, some borrowers may later need to provide documentation at the Education Department’s request.

The department will verify a certain number of borrowers have told the truth about their eligibility as a fraud prevention measure.

However, more than 90% of people with student debt fall below the income caps, according to higher-education expert Mark Kantrowitz.

4. Those who lie could face stiff penalties

Higher-education law imposes fines of up to $20,000 and as many as five years of jail for fraud and false statements involving federal student aid, Kantrowitz said.

“In addition, a borrower who lied on the form might be subject to wire fraud or mail fraud [charges],” he said.

5. Forgiveness may come within weeks

The Education Department says that after a borrower applies for forgiveness, they will get the relief within six weeks.

Experts recommend people apply as soon as the form goes live so that when student loan bills restart in January, they don’t have to make payments if their debt was fully erased or larger payments than necessary if they’re left with a smaller balance.

Sophie Tremblay

Similar Posts