• The Education Department is moving forward with its broader student-loan forgiveness plan.
  • It released new details on qualifying for the relief, set to be implemented this fall.
  • It also sent emails to borrowers last week informing them of the August 30 deadline to opt out.

The Education Department is getting closer to delivering student-loan forgiveness to millions of borrowers.

Last week, the department announced it would be sending emails to all student-loan borrowers with at least one outstanding federal loan to update them on President Joe Biden's plan to cancel student debt using the Higher Education Act of 1965.

Expected to benefit over 30 million borrowers, the plan would cancel some or all student debt for:

  1. Borrowers who owed more than they did when they first entered repayment
  2. Borrowers who entered repayment at least 20 years ago
  3. Borrowers who would be eligible for forgiveness through programs like Public Service Loan Forgiveness or income-driven repayment but haven't yet applied
  4. And borrowers who attended schools that left them with too much debt compared to post-graduation earnings.

The emails sent last week also specified an August 30 deadline for borrowers to opt out of the relief by contacting their servicers. They might choose to opt-out for a number of reasons, including avoiding potential state tax liabilities.

Along with the emails, the department recently updated its guidance on Federal Student Aid with more information on qualifying for this relief. Specifically, the department said that only borrowers who have "entered repayment on at least one of their loans when the debt relief is applied would be eligible for forgiveness on the loan(s) in repayment."

This means that borrowers with federal subsidized and unsubsidized loans are considered to have entered into repayment once their grace period ends, typically six months after they finish school. Borrowers with PLUS loans are considered to have entered repayment when their loans are fully disbursed.

Once the department finalizes its rules, it will begin implementing the relief in the fall, and unless a borrower wishes to opt out, they do not need to take any action to qualify.

For borrowers enrolled in an income-driven repayment plan at the time of the relief, if they earn less than $120,000 a year individually or $240,000 as a married couple filing jointly, the amount of their current balance that is greater than their original balance will be forgiven under the proposed rule.

Borrowers not enrolled in an income-driven repayment plan will qualify for $20,000 in relief or the amount or the amount of their current balance that's greater than what they originally borrowed, whichever is smaller.

While the department is continuing to move forward with the finalization, the relief will likely run into legal challenges that could halt or block the plan.

Are you hoping to benefit from Biden's student-loan forgiveness plan? Will it influence your vote in the election? Share your story with this reporter at [email protected]om.

Read the original article on Business Insider