When to apply for student loan forgiveness — 4 key dates to know

By next month, tens of millions of Americans should be able to start applying for student loan forgiveness.

For a number of reasons, experts say borrowers should fill out their application sooner rather than later.

These are 4 dates that should be on your radar, including three before the end of this year.

President Joe Biden announced on Aug. 24 that most federal student loan borrowers will be eligible for some forgiveness: up to $10,000 if they didn’t receive a Pell Grant, which is a type of aid available to low-income undergraduate students, and up to $20,000 if they did. (Unsure if you got one? We have tips to help you figure that out.)

Earlier this month, the U.S. Department of Education said a simple application to receive that forgiveness will be ready by “early October.” In the meantime, borrowers can sign up on its website for updates on the form’s status.

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Ideally, you’ll be ready to request relief as soon as the application launches, experts say.

Recent news that some Republicans may bring a legal challenge against student loan forgiveness means the relief could be thrown in jeopardy. If you get your loans forgiven before a lawsuit possibly gets in the way, though, you might get to keep it, higher education expert Mark Kantrowitz said, “even if the courts rule against the Biden Administration.”

To be ready to go when the application launches, check that your income and loans qualify, and gather records that may be helpful to support your request.

Federal student loan borrowers should aim to apply for forgiveness no later than Nov. 15, said Kantrowitz.

That’s because the Education Department is saying it will take up to around six weeks for borrowers to get cancellation after they apply, and you want your balanced reduced or eliminated by the time the pandemic-era payment pause on federal student loans expires on Dec. 31.

“If the forgiveness will cause your debt to be completely erased, you can avoid having to make any payments on your student loans,” Kantrowitz said.

If your balance is lower, your payments may also be lower.

In addition to Biden’s announcement on student loan forgiveness, he said he would extend the payment pause on federal student loans until Dec. 31. Payments will resume come January. It’s the seventh extension of the policy started under the Trump administration and it will likely be the final one.

Borrowers who expect to still have a monthly payment after forgiveness should start salting away some extra money now, experts say, to make sure they can accommodate the bill next year.

If you have questions for your servicer about the end of the payment pause, reach out as soon as possible, Kantrowitz said. “Loan servicers are likely to be inundated with questions starting a few days before the deadlines.”

If you’re unemployed or are dealing with another financial hardship, you’ll have options when payments resume. You can put in a request for an economic hardship or unemployment deferment. Those are the ideal ways to postpone your federal student loan payments, because interest doesn’t accrue under them.

If you don’t qualify for either, though, you can use a forbearance to continue suspending your bills. Just keep in mind that interest will rack up and your balance will be larger — possibly much larger — when you resume paying.

If your circumstances look different than they did nearly three years ago, it may make sense to review the different student loan payment plans to find the one that best fits your current situation.

The government’s income-driven repayment programs, for instance, cap your monthly bill at a share of your discretionary income. Some payments wind up being as little as $0, and any remaining debt after 20 years or 25 years is supposed to be forgiven. The standard repayment plan, meanwhile, may come with a larger monthly payment, but if you can afford it, it allows you to pay off your debt in just 10 years.

Use one of the calculators at Studentaid.gov or Freestudentloanadvice.org to compare repayment plans, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.

For now, the Education Department is saying that the final date to apply for forgiveness will be the end of next year.