Super helpful information here on loan forgiveness, a plan, that despite some Republicans' efforts, will go forward. Applying should take no more than a half hour. It takes 4-6 weeks to process. This is such great timely opportunity for folks buried in student debts, especially considering the difficult economy we're experiencing.

-Angela Valenzuela

Everything to know to apply for student loan forgiveness

The application process is now open. Some Republican-led states have filed lawsuits to try to stop the cancellation, but the Biden administration says they’re confident the challenges won’t succeed.

President Joe Biden speaks about the student debt relief portal beta test in the South Court Auditorium on the White House complex in Washington, Monday, Oct. 17, 2022. (AP Photo/Susan Walsh)(Susan Walsh / ASSOCIATED PRESS)

By The Associated Press

3:09 PM on Oct 19, 2022 — Updated at 3:47 PM on Oct 19, 2022

NEW YORK (AP) — President Joe Biden’s student loan forgiveness program. announced in August, will cancel up to $20,000 in debt per borrower. The application process is now open, and the administration says the forms should take five minutes to complete.

Borrowers who apply before mid-November should see forgiveness before Jan. 1, when payments on loans are scheduled to restart after a pause during the pandemic. Some Republican-led states have filed lawsuits to try to stop the cancellation, but the Biden administration says they’re confident the challenges won’t succeed.

Here’s how to apply, and everything else you need to know:

Who qualifies for student loan forgiveness?

You qualify to have up to $10,000 forgiven if your loan is held by the Department of Education and you make less than $125,000 individually or $250,000 for a family. If you received Pell grants, which are reserved for undergraduates with the most significant financial need, you can have up to $20,000 forgiven. If you are a current borrower and a dependent student, you will be eligible for relief based on your parents’ income, rather than your own.

One major lingering question is what will happen to students with commercially held FFEL loans who didn’t refinance before Sept. 29. At the moment those loans are not eligible (even though they were initially going to be eligible). The administration has said it’s looking for “additional legally-available options to provide relief” to those borrowers, but nothing has been announced yet.

How do I apply for loan forgiveness?

Go to studentaid.gov and in the section on student loan debt relief, click “Apply Now.”

Be ready to type in some basic personal information. The form asks for: name, Social Security Number, date of birth, phone number and email address. It does not require documentation about your income or your student loans.

Next, review the eligibility rules and confirm that you’re a match. For most people, that means attesting that they make less than $125,000 a year or that their household makes less than $250,000 a year. If you meet the eligibility rules, click the box confirming that everything you provided is true.

Click “Submit.”

How long will it take to receive forgiveness?

After the form is submitted, the Biden administration says it should take four to six weeks to process. The Education Department will use its existing records to make sure your loans are eligible and to look for applicants who might exceed the income limits. Some will be asked to provide additional documentation to prove their incomes. The Education Department estimates that the verification application will take about half an hour, including time to review and upload tax documents.

Most borrowers who apply before mid-November should expect to get their debt canceled before Jan. 1, when payments on federal student loans are scheduled to restart after a pause during the pandemic.

Will student loan forgiveness definitely happen?

Things could get more complicated, depending on the outcomes of several legal challenges. The Biden administration faces a growing number of lawsuits attempting to block the program, including one filed by six Republican-led states.

A federal judge in St. Louis is currently weighing the states’ request for an injunction to halt the plan. Biden on Monday said he’s confident that the suit will not upend the plan. “Our legal judgment is that it won’t,” he said, “but they’re trying to stop it.”

A group of Wisconsin taxpayers asked the Supreme Court Wednesday to block the program from taking effect, Bloomberg Law reported.

The emergency filing from the Brown County Taxpayers Association seeks to keep the plan on hold while the group’s legal challenge goes forward. Bloomberg News reported the Supreme Court has ruled in the past people generally don’t have the right to take the federal government to court over how tax dollars are spent.

Has the student loan payment freeze been extended?

The payment freeze has been extended one last time, until Dec. 31. The freeze started in 2020 as a way to help people struggling financially during the COVID-19 pandemic and it’s been extended several times since. It was set to expire Aug. 31.

Interest rates will remain at 0% until repayments start. Under an earlier extension announced in April, people who were behind on payments before the pandemic automatically will be put in good standing.

Does graduate student debt qualify?

Yes, federal student loans taken out to cover graduate degrees qualify for forgiveness.

What if my student loan balance includes a lot of interest?

The interest itself is considered part of the balance for purposes of this program. Forgiveness will remove $10,000 from the total balance you owe.

Will I have to pay taxes on the amount I’m forgiven?

At least a few states have said they plan to tax the forgiveness, including Indiana and Mississippi, and it’s unclear whether some others will change their tax rules to exclude forgiven student debt. Previously, Congress eliminated taxes on loan forgiveness through 2025.

Do parent plus loans qualify?

Parent Plus loans are included in the forgiveness plan, subject to the same $250,000 income cap for families that applies to the rest of cancellation.

Parent Plus loans differ from other federal education loans in that they can go towards covering expenses other than tuition, such as books, and room and board for college students. As of March 2022, parents of 3.6 million students owe more than $107 billion in Parent Plus loans, according to the Department of Education. That represents about 6% of the total amount of federal student debt held by Americans.

If a parent received a Parent Plus loan on behalf of a student and the same student received a direct loan, both would receive relief, as the cancellation is on a per-borrower, not a per-student basis. That means that each person who has Education Department-held federal student loans and meets the income requirements qualifies for cancellation.

What’s a Pell grant and how do I know if I have one?

Roughly 27 million borrowers who qualified for Pell grants will be eligible to receive up to $20,000 in forgiveness under the Biden plan.

Pell grants are special government scholarships for lower-income Americans, who currently can receive up to $6,895 annually for roughly six years.

Nearly every Pell Grant recipient came from a family that made less than $60,000 a year, according to the Department of Education, which said Pell grant recipients typically experience more challenges repaying their debt than other borrowers.

Pell grants themselves don’t generally have to be paid back, but recipients typically take out additional student loans.

“This additional relief for Pell borrowers is also an important piece of racial equity in cancellation,” said Kat Welbeck, Civil Rights Counsel for the Student Borrower Protection Center. “Because student debt exacerbates existing inequities, the racial wealth gap means that students of color, especially those that are Black and Latino, are more likely to come from low-wealth households, have student debt, and borrow in higher quantities.”

To find out if you have a Pell grant, check any emails you’ve received that describe your FAFSA award.

How many people will this help?

About 43 million Americans have federal student debt, with an average balance of $37,667, according to federal data. A third of those owe less than $10,000. Half owe less than $20,000. The total amount of federal student debt is more than $1.6 trillion.

What if I’ve already paid off my student loans — will I see relief?

If you’ve voluntarily made payments since March 2020, when payments were paused, you can request a refund for those payments, according to the Federal Office of Student Aid. Contact your loan servicer to request a refund.

What repayment plan is the Department of Education proposing?

The Department of Education has proposed a repayment plan that would cap monthly payments at no more than 5% of a borrower’s discretionary income, down from 10% now. Borrowers will need to apply for the repayment plan if it’s approved, which could take a year or more.

For example, under the proposal, a single borrower making $38,000 a year would pay $31 a month, according a government press release.

The amount considered non-discretionary income will also be increased, through the department has not said how much.

Discretionary income usually refers to what you have left after covering necessities like food and rent, but for student loan repayment purposes it’s calculated using a formula that takes into account the difference between a borrower’s annual income and the federal poverty line, along with family size and geographic location.

“What’s tough about income-driven repayment is that it does not take into account your other liabilities, such as your rent payment,” said Kristen Ahlenius, a financial counselor at Your Money Line, which provides financial literacy training. “If someone’s living paycheck to paycheck and their rent is taking up half of their paycheck and then their car payment takes the other, they have to choose. Unfortunately, income-driven repayment doesn’t take that into consideration, but it is an option.”

Student Debt Relief offers a calculator to help determine your discretionary income.

What if I can’t afford to pay even with loan forgiveness?

Once payments resume, borrowers who can’t pay risk delinquency and eventually default. That can hurt your credit rating and mean you’re not eligible for additional aid.

If you’re struggling to pay, check if you qualify for an income-driven repayment plan. You can find out more here.

The Biden plan also includes a proposal that would allow people with undergraduate loans to cap repayment at 5% of their monthly income. Proposals like this one can take a year or more to be implemented, and it’s not clear what the fine print will be.

If you have worked for a government agency or a non-profit organization, you could also be eligible for the Public Service Loan Forgiveness Program, which you can read more about here.

The Dallas Morning News contributed to this report.

By CORA LEWIS and ADRIANA MORGA Associated Press. Collin Binkley contributed to this report from Washington.

UT Austin Sees Increase in Pell Enrollment by M. St. Amour, INSIDE HIGHER EDUCATION

Despite a downward trend nationally in Free Application for Federal 

Student Aid (FAFSA) applications and downward enrollment for low-income 

students, nationally—particularly with respect to minoritized youth 

attending community colleges—enrollment of low-income students at 

UT Austin is bucking the trend.

Likely due to population growth in Texas together with students preferring to

remain in-state, combined with the UT for Me program, our university appears 

to be a compelling option.  How fortunate for us at UT and how fortunate for

Texas students. UT for Me is a $100 million, multi-year commitment 

from the Michael & Susan Dell Foundation that is making college possible

for many.  Thanks to the Michael & Susan Dell Foundation for rising 

to the occasion at such an important time in our state's history. 

Although more always needs to be done, these are still heartening 

news.  Thanks to Dr. Rich Reddick for sharing. 

-Angela Valenzuela

UT Austin Sees Increase in Pell Enrollment

The Texas flagship university is seeing an increase in low-income enrollment 

at a time when many higher education experts are worried that the most 

vulnerable students are putting their educations on hold.

By 

Madeline St. Amour

 

November 18, 2020

Most people in higher education have heard the bad news by now: enrollment is down, for pretty much everyone, across nearly all student demographics, as the COVID-19 pandemic rages on.

Much of the loss is concentrated among community colleges and students of color. Renewals of the Free Application for Federal Student Aid were down nearly 5 percent for students from the lowest-income backgrounds. The typical countercyclical nature of higher education enrollment -- when employment rates drop, enrollment rises -- isn't happening this time around, many experts say.

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It may be surprising, then, that the University of Texas at Austin reports its enrollment of low-income students is actually up from last year's.

Enrollment for Pell Grant-eligible freshmen increased from 1,803 students to 2,361 students, accounting for more than one-quarter of the incoming class. Pell Grant enrollment rates for all undergraduates is up by about one percentage point. Pell enrollment rates for Black students are up from 9.8 percent to 10.5 percent, and rates for Latinx students from 46.2 percent to 48.2 percent.

These numbers are reassuring, said Mamie Voight, vice president of policy research at the Institute for Higher Education Policy.

"The increase certainly seems notable for a one-year change," she said. "It’s really important to have these types of investments in students from low-income backgrounds, and then support them through to completion."​

Enrollment in Texas statewide is down 3.6 percent, with the majority of colleges reporting, according to data from the National Student Clearinghouse Research Center. UT Austin's undergraduate enrollment is about flat, with a drop of only 0.3 percent, led mainly by a decline in international student enrollment.

Jay Hartzell, president of UT Austin, credits several factors for the uptick in Pell Grant-recipient enrollment.

Texas is one of the states in the nation with genuinely positive population growth. The pandemic made more students think about staying in their home states for college and looking at public universities as a cheaper option.

But potentially one of the largest impacts is several relatively new scholarship programs at the university, Hartzell said.

"The word is getting out that we do have increased financial resources for students who qualify," he said. "You think of all these things, and it feels like they lined up in a way that attracted these students."

The newest scholarship is the UT for Me program, which is funded through a 10-year, $100 million commitment from the Michael & Susan Dell Foundation. The money goes to students eligible for Pell Grants. The university will cover their tuition costs, and the foundation's scholarship will fund wraparound supports. The Dell Scholar at UT Austin program, which is part of the partnership with the foundation, will provide $20,000 for up to six years for living costs to first-time students with an expected family contribution of less than $1,000.

The goal of the program is to increase the graduation rate for students who receive Pell, which is at 73 percent right now, up to 90 percent. UT Austin's overall graduation rate is 86 percent.

More than 2,300 students are in the first cohort of the UT for Me program, and about 1,500 of them are Dell Scholars, meaning they are receiving the extra scholarship. Admissions staff point to that program as perhaps the most important factor in the bump in freshman Pell-recipient enrollment. A new cohort will be added each year for the next four years.

Targeting low-income students and covering some nontuition costs, plus pairing the financial support with services like advising, are likely what led to the results UT Austin is seeing so far, Voight said.

But the program is meant for first-time students, which leaves out many who most need the help, she said. Adults with some credits, transfer students and people who had stopped out of college wouldn't be eligible for the program. Many of the students looking to enroll in colleges now, during a recession, are likely in those groups.

The foundation is also giving the money to a flagship university, a relatively well-resourced institution. While that's not a bad thing, Voight said it's important to remember other institutions, like community colleges or minority-serving institutions, would greatly benefit from similar investments.

​​"I would like to see these types of programs expanded to address the large number of students who are attending other institutions as well," she said.

John Fitzpatrick, executive director of Educate Texas, a nonprofit focused on policy and strategy for public and higher education in the Lone Star state, is excited about UT Austin's efforts to focus on vulnerable students.

"The [programs] are unbelievable opportunities for recruitment and retention for Texas students," he said. The extra resources offered in the Dell Scholars program, like laptops and funds for expenses, will likely help Pell students' retention rates, too, he said.

The personalized approach will also help, he predicts.

"UT Austin is a big institution, and at large public institution, Pell-eligible kids can get lost," Fitzpatrick said. The Dell Scholars program offers advising and case management-style help for students.

Shareea Woods, director of the Texas College Access Network at Educate Texas, is excited to learn from these programs and see what impact they have over a period of years.

The challenge, Fitzpatrick added, will be figuring out how to build these kinds of programs driven by philanthropy into institutions' budgets, and how to make them work at lower-resourced colleges.

Wil Del Pilar, vice president of higher education policy and practice at the Education Trust, thinks it's interesting that UT Austin has seen an increase, but he doesn't think it's enough.

"Given that 50 percent of students in Texas qualify for free and reduced lunch in the K-12 system, I don’t think we should be applauding a one-percentage-point increase," he said.

Instead, this effort is indicative of what it takes for institutions to commit to this issue.

"It took UT Austin a $100 million gift to find their motivation to enroll more low-income students," Del Pilar said. "In my opinion, I’d like to see them do more. They should’ve been doing more all along."

That said, Del Pilar does think the scholarship programs are a great step forward, and crucial for students during this economic downturn. But he thinks the reason why more low-income students are enrolling at UT Austin is that they're being more actively recruited for the purpose of these scholarships, not just the scholarships themselves.

"There have to be other reasons, besides a gift, for institutions to find the will to increase enrollment," he said. "These are talented students who have the ability -- they just need resources."

The Texas Advance Commitment is potentially another draw for Pell recipients. The program is in its second year. Using money from the UT system, UT Austin is covering tuition gaps for students with family incomes of less than $65,000. Those from families with incomes between $65,000 and $120,000 also get some support.

The university is working with donors to contribute to the fund so it can cover room and board costs, or the full cost attendance, in the future, Hartzell said.

Prior to this fall, 5,000 students received support from the Texas Advance Commitment. This fall, more than 13,000 students are receiving support through the program.

Both programs are based on students' financial needs and don't require separate applications. Students who fill out the FAFSA and meet the Pell and income requirements automatically get the awards, Hartzell said.

"We all knew that it’s been a challenge to recruit really smart students who may view finance as a burden," he said, adding that private colleges may offer better financial aid packages. "We wanted to be competitive and get students to stay in Texas."

This work has become more critical due to the pandemic, he said.

"In the age of COVID-19, when in general many low-income families have been disproportionately harder hit by the pandemic, I think it’s arguably more important than ever for us to rally and support students from low-income families," Hartzell said. "We’ve all come to appreciate that being part of a university like ours could go toward leveling the playing field."

Read more by 

Madeline St. Amour