Biden’s student-loan relief application will open any day. Here are 5 steps to prepare.

President Biden’s plan to erase up to $20,000 in student loans will require millions of borrowers to fill out an application to receive approval, a step that will likely be available within days.

The application will open in October, which will be a “short online application,” the Department of Education said on September 29, although it didn’t specify when exactly the form would go live. In the meantime, borrowers can take a few steps to make sure they are prepared to fill out the form when it goes live.

Because only some types of debt are covered by the plan — and some borrowers will be able to tap higher forgiveness limits than others — borrowers should make sure to understand their loans and what they qualify for before they fill out an application, experts say. Even if you have everything ready to apply, there may be technical glitches as it’s likely that millions of borrowers will flood the site when the application goes live, noted Melissa Byrne, executive director of WeThe45Million, an activist group of borrowers who lobbied for debt relief. 

“I’m confident that the Biden Administration is 100% on it, to deliver relief, but it’s a very big system,” Byrne noted. “Everyone wants their relief right away.”

There’s also a potential roadblock to Biden’s relief effort that borrowers should keep an eye on: a legal challenge. 

A federal judge is expected to rule on a lawsuit against Mr. Biden’s student debt plan from six GOP-led states by October 12, Washington Post reporter Danielle Douglas-Gabriel told CBS News. If the judge places an injunction on Biden’s move, it “may create a stall or halt to this policy,” she said.

The lawsuit, filed in September by attorneys general in Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina, argues that taxpayers shouldn’t be saddled with paying the debt of other Americans who opted to go to college and now can’t repay their loans. 

“Everyone’s paying attention for the next week or so to see what will come out of that case,” Douglas-Gabriel said.  

In the meantime, here are 5 steps you can take now to prepare for the application. 

Sign up for an application alert

First, sign up for an alert from the Department of Education that will let you know when the application goes live. This can be done at Department of Education subscription page. Check the first box, which is called “NEW!! Federal Student Loan Borrower Updates.”

Don’t forget to monitor your email and spam filters for updates from the Department of Education, Byrne noted. “Be chained to your inbox in case you get a communication,” she added. 

Check whether you are a Pell Grant recipient

People who received Pell Grants to fund their education can receive up to $20,000 in debt relief — double the $10,000 in forgiveness available to everyone else. 

Pell Grants are provided to low-income students, but Byrne noted that some borrowers may not be aware if they received one, especially if their parents filled out the Free Application for Federal Student Aid, or FAFSA, for them. FAFSA is the financial aid application that’s required to receive loans, financial aid and grants. 

“There are a lot of people who don’t even know because their parents might have been handling it, and they were 17 or 18 years old,” she noted. 

To check, go to StudentAid.gov and log into your Federal Student Aid account. On your dashboard, look for “My Aid” and then for the section for grants and loans, which will provide the data. 

Determine if your loans are covered

The Biden administration’s plan covers federally held loans, which means you should check that your loans qualify. Private student debt won’t be part of the forgiveness. 

And the Biden administration recently changed its guidance to eliminate some student loans from eligibility for forgiveness, a major reversal as the Department of Education makes final preparations to launch debt relief applications. 

As of September 29, borrowers with student loans through the Federal Family Education Loan (FFEL) program and Perkins Loans who have not already consolidated their debt into direct loans will now no longer be able to do so and are no longer eligible for federal debt relief, the Education Department now says. 

Those programs, though federally guaranteed, are held by private institutions. Borrowers with FFEL and Perkins Loans who applied to consolidate in the direct loan program before Thursday will still eligible for debt relief. 

Gather income data 

The program is limited to individuals who earned less than $125,000 or married couples with incomes below $250,000. 

The program will use adjusted gross income, or AGI, which is a figure that reflects your gross income minus some adjustments like student loan interest, according to the IRS. You can find that figure on your tax return (Form 1040) on line 11.

Check your AGI for both 2020 and 2021, because the Biden administration said it will consider either year. 

“Everyone should figure out what their AGI is for those years  — even if it’s a penny below $125,000 for individuals or one penny below $250,000 for married couples, you’ll qualify, Byrne noted. 

Mark November 15 on your calendar

The Department of Education is alerting borrowers to apply before November 15 in order to get debt relief before the student loan payment pause ends on December 31.

If you don’t apply by then, not all is lost: the deadline to apply for loan forgiveness is December 31, 2023, and the education department notes that it will continue to process applications as they are received, even after repayments resume in January. 

But if you want to make sure your payments reflect the loan relief starting in January, apply before November 15. 

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