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Change to student debt forgiveness plan could disqualify some Washington borrowers

By Alyse Messmer-Smith and Aaron Mudd, Alyse Messmer-Smith and Aaron Mudd, The Bellingham Herald
Published: October 18, 2022, 8:30am

BELLINGHAM — A recent change in the Biden Administration’s student debt forgiveness plan may mean that fewer Washington borrowers qualify for relief.

President Biden announced the student loan debt plan in late August, promising to forgive up to $20,000 of debt for those earning less than $125,000 annually:

But a recent change by the U.S. Department of Education in the debt relief plan may exclude 800,000 Americans from receiving the debt forgiveness they were once promised, according to NPR.

Although Washington state has the 4th smallest amount of student loan debt in the United States, many borrowers may be affected.

Here’s what you need to know about the recent policy change, if you are still eligible and how to apply for student loan forgiveness.

Are my student loans eligible for forgiveness?

When the student loan debt plan was first announced, the U.S. Department of Education said that those with Federal Family Education Loans, loans that were issued and managed by private banks but were still guaranteed by the federal government, could consolidate their loans into federal direct loans to qualify for loan forgiveness. This would then make the loans owned by the federal government, and eligible for loan forgiveness.

But on Sept. 29, the department changed the fine print of the plan and disqualified almost a million student loan borrowers from student loan forgiveness.

Under the new changes, the U.S. Education Department’s new student loan relief guidance states that “borrowers with federal student loans not held by ED cannot obtain one-time debt relief by consolidating those loans into Direct Loans.”

Those with privately held federal loans who applied to consolidate their loans as direct loans before Sept. 29, 2022 will obtain one-time debt relief, according to NPR reporting.

Do I qualify for student loan forgiveness?

According to the U.S. Department of Education, you are eligible for student loan forgiveness if you:

  • Have an annual income below $125,000 for individuals or $250,000 for married couples or heads of households.
  • Received a Pell Grant in college and meet the income requirement, you are eligible for $20,000 in debt relief.
  • Did not receive a Pell Grant but still meet the income requirement, you are eligible for $10,000 in debt relief.

As only federal student loans are eligible for forgiveness, you should confirm if your loans are privately owned. Borrowers can log into their account on studentaid.gov or to see the status of their loans. If your loan is not stated on your account, it likely means your loan is private and is not eligible for the student loan debt forgiveness plan.

Loans can also be checked through the National Student Loan Data System.

How do I apply for student loan forgiveness?

The application for federal student loan debt relief is now available online, and takes about 5 minutes to complete. The U.S. Department of Education will determine if you are eligible, or contact you to get more needed information.

The U.S. Department of Education advises borrowers to apply by mid-November, and those who qualify can expect relief within six weeks of being approved.

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