How to Determine Student Loan Payment After Forgiveness
If you qualify for Biden’s massive student loan write-off plan , then you can – and should – apply now . Earlier this week, the US Department of Education launched a beta form for federal student loan debt relief. But what happens after you submit an application? Here’s how to find out what your new balance and monthly payments will look like after applying for student loan relief.
How debt relief will apply to your loans
After you submit your application, the Federal Student Services ( FSA ) will notify you as soon as they confirm your eligibility for forgiveness. They will then determine how debt relief will apply to your loans and from there they will be the ones to provide that information to your loan officer(s).
If you still have a loan balance after applying the maximum debt relief amount, your monthly payment will be recalculated based on your new balance. Your credit service will be the one to notify you of the balance and the new monthly payment amount.
Please be aware that student loan payments are not required until the current payment pause ends on December 31, 2022 .
What if you made payments during the pandemic pause?
If you made payments during the pandemic pause that left your balance below the amount of assistance you are eligible for ($10,000 or $20,000), but you didn’t pay off your loan in full, those payments will be refunded automatically . Your monthly payments will be recalculated from there.
Here is an example provided by the FSA : Let’s say you are eligible for $10,000 debt relief. If you currently owe $9,500, this assistance amount will be applied to your loan(s). If you paid $1,000 during your suspension, you will automatically be refunded $500, the remainder of your $10,000 debt relief.
How to find your loans (and loan providers)
Go to studentaid.gov . Note. This is not the same portal you would normally use to pay your student loan (for example, through a service provider like Sally Mae). After logging in, select “My Help” from the drop-down menu under your name. Your credit service organizations should appear in this section. By clicking on Loan Breakdown, you will see a list of loans you have received, including loans that you have paid off or combined into a new loan.
Once you have verified your loan company, visit that service provider’s website and log into your account to make sure all your contact information is up to date so that you don’t miss any notification from them during this process.
To recap, it is your existing loan provider, not the government, that will inform you of any outstanding balance and revised monthly payments (and those payments will not resume until January).
What else you need to know about a student loan forgiveness application
It only takes two minutes to complete the ” short and simple ” application: just enter your name, date of birth, social security number, phone number and email address. You do not need supporting documents (such as tax returns) or a student financial aid ID.
If you apply through the current beta, it will be formally processed and you won’t need to resubmit your application when the app officially opens later this month . The application will remain open until December 31, 2023, so while there is no rush to apply, it doesn’t hurt to submit your application as soon as possible – the sooner you do so, the sooner you’ll see forgiveness applied to your outstanding balances. The Department encourages borrowers to apply for assistance by mid-November .
Until October 23, 2022, student loan debt will not be canceled, but NPR reports that borrowers who fill out an application should see their debts canceled within a few weeks. Once again: Here’s the app page for the beta, which is out now.