![]() The Biden administration's announcement came hours after a borrower sued, arguing that he would be forced to pay state taxes on the amount canceled - an expense he would otherwise avoid. The White House clarified last week that borrowers will be able to opt out if they don't want to receive the debt forgiveness. Now, privately held federal student loans must have been consolidated before September 29 in order to be eligible for the debt relief. The Department of Education initially said these loans, many of which were made under the former Federal Family Education Loan program and Federal Perkins Loan program, would be eligible for the one-time forgiveness action as long as the borrower consolidated his or her debt into the federal Direct Loan program.īut the agency has reversed course after six Republican-led states sued the Biden administration, arguing that forgiving the privately held loans would financially hurt states and student loan servicers. The administration has said the change could affect about 700,000 people. The program will now exclude borrowers whose federal student loans are guaranteed by the government but held by private lenders. The Biden administration scaled back eligibility for the program last week, as it faces mounting legal challenges to the policy. But due to ongoing lawsuits, the government has agreed in court to hold off canceling any federal student loan debt before October 17. It's unclear when exactly debts will be discharged. When will forgiveness start?Ībout 8 million people are expected to receive student loan forgiveness automatically because the Department of Education already knows what their income is, likely due to previously submitted financial aid forms or income-driven repayment plan applications. ![]() To be notified when the process has officially opened, sign up at the Department of Education subscription page. We'll contact you if we need any additional information from you," the department said an email to borrowers last week.īorrowers will have more than a year to apply. ![]() "Once you submit your application, we'll review it, determine your eligibility for debt relief and work with your loan servicer(s) to process your relief.
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