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The White House has repeatedly said that its application for student loan forgiveness, which is expected to go live within days, will be simple.
Still, consumer advocates say any red tape surrounding the bailout is likely to cause millions of borrowers to miss out.
“Those who need it the most won’t get it, and that will make policy more regressive,” said Thomas Gokey, co-founder of the Debt Collective, a national association of debtors. “There will be a higher percentage of people making $124,000 a year applying than people making $30,000.”
Most people with federal student debt are 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 students, and up to $20,000 if they did.
Yet nearly 20% of eligible borrowers may not take the necessary steps to get this relief, according to the U.S. Department of Education’s own estimate.
That reaches more than 7 million people, explained higher education expert Mark Kantrowitz.
“I’ve seen too many examples where people assumed they weren’t entitled to something, but actually were, and ended up leaving money on the table,” Kantrowitz said.
The White House did not immediately respond to a request for comment.
Applicants may miss mistakes due to wrong beliefs
A big reason some eligible borrowers may not apply is that they will mistakenly believe their income disqualifies them, Kantrowitz said. The relief is limited to borrowers who earned less than $125,000, or married couples or heads of household who earned less than $250,000 in either 2020 or 2021.
However, the vast majority of people with student debt fall below these income ceilings, Kantrowitz said. “Most people with just a bachelor’s degree or a master’s degree should qualify,” he said.
Still, others may not apply because they are unsure of what their income was in 2020 or 2021. “Do you remember how much you earned two years ago?” Kantrowitz said.
Some borrowers, meanwhile, may have outdated contact information on file with their student loan servicer and therefore not receive updates about the relief, according to Kantrowitz.
You should ensure that your service representative, as well as the training department, has the latest contact information for you. You can make sure that the data is current at StudentAid.gov. You can also register on the government’s website for developments in the process.
Borrowers who are unsure whether they qualify for forgiveness might as well apply anyway, said Douglas Boneparth, a certified financial planner and president of Bone Fide Wealth in New York.
“The worst that can happen is they’re not eligible,” Boneparth said. “There’s no downside to that. But if they qualify, they can get relief, and that could be huge.”
“Submitting an application should only take a few minutes,” he said.