For borrowers worried about paying off existing student loans, President Joe Biden’s debt forgiveness plan — announced in August — may have provided some relief.
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Debt relief application forms are expected to be available online during the first week of October on the U.S. Department of Education’s Federal Student Aid site. However, there are things student loan debtors can do to prepare for the application process beforehand.
According to CNBC, being prepared and having all relevant loan information at the ready will help you take advantage of this unique debt relief opportunity without any complications. The following three steps should be taken, according to experts.
1. How Much Student Loan Relief Do I Qualify For?
As CNBC suggested, the first thing you should do is to verify if your income is under the qualifying threshold for debt relief.
Borrowers who earned less than an adjusted gross income (AGI) of $125,000 in either 2020 or 2021 ($250,000 for households) will be eligible for up to $20,000 in cancelled debt from the Department of Education if they are a Pell Grant recipient — and up to $10,000 if they hold non-Pell Grant federal student loan debt.
Per the Federal Student Aid site, most federal student loans with an outstanding balance as of June 30, 2022, are eligible for loan relief. These include graduate and undergraduate Direct Loans, Parent PLUS and Grad PLUS loans and consolidation loans, if all of the underlying consolidated loans were disbursed on or prior to June 30, 2022.
Your AGI is different than your total gross income. AGI is your gross income that is taxable, after qualified adjustments or deductions (like student loan interest), per the IRS. To find your AGI on either of your 2020 or 2021 tax returns, look for Line 11 on your Form 1040.
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2. Know Your Loan Details and Have Them Ready
Checking your “My Aid” profile on the Studentaid.gov site will tell you what sort of loan type you have. If you have one of the federally-controlled loans listed above, you shouldn’t have to do anything more than apply in October to get loan relief.
However, some Federal Family Education Loans (FFEL) and Perkins Loans held by the Department of Education are eligible, and some held by private lenders are not. Defaulted loans controlled by the Department of Education, including commercially serviced subsidized or unsubsidized Stafford Loans, are eligible.
Non-federal private student loans are not eligible for debt forgiveness. That incudes any federal loans consolidated into private loans. Regarding privately-owned federal student loans (FFEL or Perkins Loans not held by the federal government), the Department of Education is trying to figure out a way to expand eligibility.
If you find out that your loans are not eligible for relief, you may be able to consolidate them into the federal Direct Loan Program to take advantage of available debt relief under Biden’s plan.
3. Contact Your Loan Provider and Update Your Contact Information ASAP
There is absolutely no harm in contacting your loan service provider with any questions you might have and making sure that every party involved with your loan (particularly your provider and the Department of Education) has your up-to-date contact information and current address.
Per the Federal Student Aid site, borrowers will have until Dec. 31, 2023, to submit their loan forgiveness applications. But the Department of Education is advising borrowers to sign up for forgiveness plan email updates on its subscription page — and to apply as soon as debt relief registration opens.
Higher education expert Mark Kantrowitz says that borrowers should apply before Nov. 15 to receive their relief funds before the payment pause/loan moratorium ends on Dec. 31, 2022. Borrowers should ostensibly receive their loan relief 4-6 weeks after applying.
If the Department of Education site can’t answer your nagging questions, call your loan service provider. They are the experts and should be able to put your mind at ease.
Per CNBC, getting in early is the key to getting your relief funds quicker and, should any rumored political roadblock occur, you may get and be able to keep your funding “even if the courts rule against the Biden administration,” according to Kantrowitz.
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This article originally appeared on GOBankingRates.com: Expecting Student Loan Forgiveness? 3 Ways To Plan Ahead Before Applying