Student Loan Forgiveness - What you need to know

The Department of Education recently announced a three-part plan to help student loan borrowers. The first phase is offering up to $20K in loan forgiveness for eligible borrowers. Additional details will be announced in the coming weeks. Interested borrowers can subscribe to receive email updates when the application process opens. Once the process opens, eligible borrowers have until Dec. 31, 2023 to apply.

Borrowers have until the end of 2023 to apply for student loan forgiveness. While the application process isn't yet fully defined, experts advise borrowers to have all the pertinent records at hand. While eight million borrowers in income-driven repayment plans will not have to certify income, others may need to hold onto their tax returns and loan records to prove their income.

The government has also paused the payment of federal student loans until January 2023, meaning that borrowers who apply now may not have to make a single payment until January 2023. If you've made a payment in the past, you can request a refund of that amount by contacting your loan servicer. If you've received a billing notice, make sure you contact your servicer to get specifics on when your first payment is due.

To qualify for student loan forgiveness, borrowers must earn below $125,000 for an individual and $250,000 for a couple. 

The federal government offers several types of debt forgiveness programs. The PSLF allows students to receive a percentage of their debt forgiven if they have paid on time for a decade or more. The program is designed to help borrowers with low incomes. However, the eligibility requirements are strict.

The federal government created PSLF in 2007 to help those who are struggling with student debt. The program offers a path to forgiveness that's much easier than before. But the qualifying criteria includes working for 10 years in a public sector position and making 120 on-time payments. Borrowers can even gain additional credit by serving their country. The deadline is October 31, 2022.

The federal government has updated its deadlines for federal student loan forgiveness. As long as borrowers meet their income requirements, they will have until 2023 to submit their application. If they don't apply by Nov. 15, they'll have more than a year until the end of 2023 to apply. Once approved, those who qualify for forgiveness will be freed of the rest of their debt.

The Biden administration has offered student loan debt relief to the nation. This relief will help lighten the burden of student debt, which is estimated to be $1 trillion. The amount owed by Californians alone is $142 billion. The average California student loan debt is $37,000. It is estimated that over 92% of those who apply will qualify for the new loan forgiveness.