The Biden administration is trying to make it as easy as possible for federal student loan borrowers to get debt relief of up to $20,000, having recently launched an online loan forgiveness application that can be filled out in a few minutes and an awareness campaign to notify borrowers of the process. For an estimated 8 million borrowers, relief will be automatic — and no application will even be required.
Explore: GOBankingRates’ Best Credit Cards for 2023
Advice: If Your Credit Score is Under 740, Make These 4 Moves Now
That’s because the income information for those borrowers is already on file with the U.S. Department of Education, meaning they won’t have to apply for canceled loans, the Washington Post reported. These borrowers either recently filled out the federal financial aid form (FAFSA) or are enrolled in an income-based loan repayment plan.
Eligible borrowers will receive emails from the Education Department providing details on automatic relief options. Officials with the agency have advised borrowers to beware of companies offering help with student loan cancellation in exchange for payment.
As previously reported by GOBankingRates, the loan forgiveness application process formally launched with a beta test over the weekend. By Monday, millions of borrowers had already applied.
Federal student loan borrowers with an annual adjusted gross income of less than $125,000 in either 2020 or 2021 — or $250,000 for households — will be eligible for up to $10,000 in canceled debt. Those who received Pell Grants will be eligible for up to $20,000 in cancelled debt.
As many as 40 million Americans could benefit from the plan. The vast majority will have to go to the Education Department’s Federal Student Aid website to fill out the application, where they’ll be asked to provide personal information and confirm that they are applying for relief and meet the eligibility requirements.
That’s not the case for those who can be automatically enrolled, however. As the WaPo reported, if automatic enrollees don’t bow out, the Education Department will process their relief after Nov. 14. Borrowers eligible for automatic relief can fill out an application if they want the cancellation processed sooner.
Take Our Poll: Do You Have an Emergency Fund Established?
Some borrowers might be leery about accepting debt relief amid reports that in some states the canceled debt will count as income that can be taxed. The Education Department has even faced lawsuits seeking to block the loan forgiveness plan because of its potential tax implications.
However, White House officials have countered that the plan is voluntary and borrowers can opt out if they don’t want to take part.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Student Loan Forgiveness: You May Automatically Qualify — Here’s Why