Help is on the way for a significant number of Americans in debt. The initial application is now open for the Biden administration’s federal student loan forgiveness program. Pending the outcome of several lawsuits, borrowers may qualify for a forgiveness of up to $10,000 if their loan is held by the Department of Education and they earn less than $125,000 individually or $250,000 $ for a family.
For those who have received Pell grants, up to $20,000 can be forgiven – and for many black Americans this is big news, as nearly 57% of black students receive Pell grants each year.
Maureen Amos, executive director of financial aid, scholarships, and student employment at Northeastern Illinois University, says the program can significantly reduce debt for the students it serves.
“At my institution, our average student debt is less than $10,000,” Amos said. “If you look at current research on black students, black students tend to borrow between $40,000 and $60,000 – so even $20,000 as loan forgiveness or forgiveness is very beneficial.”
City Colleges of Chicago Associate Vice Chancellor for Financial Aid and Scholarships Richard Hayes said the simple application is meant to encourage as many people as possible to apply.
“It literally takes about a minute to apply…they just need to know their social security number, name, date of birth and they fill it out and the Department of Education will contact them if they have need additional information,” Hayes said. “We hear stories all the time of students having trouble with the FAFSA application. So they thought about this is we want to make sure it reaches the students, we want to make sure it’s easy and then we can do the hard work on the back end.
Hayes says that while this program doesn’t offer private student loan forgiveness options, he urges borrowers with private debt to talk to their loan officers and be upfront and honest about their financial situation.
“It’s about contacting your financial aid professional, setting up a payment plan, they have a lot of income-based payment plans, so if a student isn’t earning as much as they thought at the out of college, he can use that as a way to pay a lesser payment if they have private student loans,” Hayes said. “The worst thing you can do is not say anything. , not calling them, or avoiding them is how students find themselves at fault.
Hayes also encourages students to consider state and community college options first to avoid overborrowing.
The deadline to apply for the Civil Service Loan Scheme, which forgives loans to people who work for nonprofit organizations, has been extended until October 31. Amos said the application process can be tedious, but for those who qualify, it can be worth the effort.
“They can go through their service agent and ask for loan forgiveness as well as if they work for a nonprofit…and then you need your employer to confirm that you work for a nonprofit Amos said. “It’s a waiting game once the request is submitted so you can hear from your repairer. However, I have heard good news from some of our borrowers that they are getting a response within the timeframe given to them.