How to Check If You Qualify for Biden’s New Student Loan Forgiveness Plan

In order to fulfill his campaign pledge to help millions of Americans with their student loan debt, President Joe Biden said on Wednesday that the administration would forgive up to $10,000 in federal student loans for the majority of borrowers.

Borrowers who make less than $125,000 annually for single people and less than $250,000 annually for married couples or head of households are not eligible for the plan. Pell Grant holders who meet the income requirement are also covered by the scheme and are eligible to receive assistance of up to $20,000. Holders of private loans are ineligible for relief.

There hasn't been much detail provided on how consumers may determine if they're eligible for the debt relief and what the application will include, despite the announcement stating that an application for borrowers to apply for the program would be available "in the coming weeks."

However, the release states that over 8 million borrowers for whom the Department of Education has income information accessible should be qualified for immediate debt relief.

Here is what you need to know and how you may get ready until the government releases further details on what borrowers must do to receive relief:

How can I check if I qualify for student loan forgiveness? 

• Check your 2020 and 2021 tax returns to make sure you satisfy the income requirement because, according to experts, the government will probably estimate your yearly income from one or both of those documents.
• By signing into your Free Application for Federal Student Aid (FAFSA) account using your FSA ID, you may determine whether you are a Pell Grant recipient and whether you are eligible for further aid. Your student aid report (SAR), which lists all of the financial aid awards you have earned, including any Pell Grants, should be available on the portal. The financial assistance award letter you received from the school you attended also contains this information.

What do I need to do to get my loans paid off as part of the program? 

• To be informed when the application is available, sign up for the department's "federal student loan borrower updates" emails.
• Check your FAFSA and loan servicer accounts for communication preferences so you are aware of how and where these organizations will contact you for debt reduction.
• Prepare copies of your most recent tax returns and documentation of the remaining loan debt in case you need to demonstrate your eligibility.

‘We’re all sitting tight for more information’

The implementation of a comprehensive student loan forgiveness program will be "slow process" that requires “a lot of communication between the Department of Education and loan servicers,” Michelle Dimino, a senior education policy leader at public policy group Third Way, tells CNBC Make It. ”[Most] borrowers won’t automatically see their balances be cleared or reduced … we’re all sitting tight for more information.” 

The administration’s broader debt forgiveness plan is “incredibly problematic and confusing to borrowers” as it stands now, Scott Buchanan, executive director of the Student Loan Servicing Alliance, says, but he’s optimistic that the details of the application process get “ironed out” and become “much clearer” in the coming weeks. 

“Education is a ticket to a better life. … but over time that ticket has become too expensive for too many Americans,” in an address delivered from the White House hours after the announcement, Biden said. “All this means that an entire generation is now saddled with unsustainable debt in exchange for an attempt at least at a college degree. The burden is so heavy that even if you graduate you may not have access to the middle-class life that the college degree once provided.”