Five Ways Student Loan Borrowers Can Prepare to Apply for Forgiveness

"In a matter of weeks, the Biden administration is set to unveil applications for student borrowers to register for up to $20,000 in loan forgiveness," The Hill reports

... "'Some borrowers, depending on when they were enrolled, may have to first create an FSA [Federal Student Aid] ID to log into that student aid account,' said Rachel Gentry, director of government relations at the National Association of Student Financial Aid Administrators. 'Some borrowers already have that ID from when they were students.'" 

"Gentry stressed that borrowers should ensure now 'that their contact information is all up to date' with both their loan servicers and the Education Department in their account."

"FFELP loans 'were issued by private and state lenders, but they were guaranteed by the federal government,' Gentry explained. 'So what that means is that if one of those borrowers were to default on their loan, the government would pay those private and nonfederal entities who are the lenders a substitute to kind of make up for their losses.'"  

"'When we transitioned to 100 percent direct lending a little over a decade ago, some of those [FFELP] lenders’ portfolios were purchased by the federal government … so those loans that were purchased at that time basically became like federal loans,' she continued." 

"However, Gentry said some of the commercially held FFELP loans are still owned by private and state lenders. 'We’re still waiting for more information on what folks with commercially held [FFELP] loans are going to need to do to access the forgiveness, whether they there will be a way for them to not have to take action to receive forgiveness or whether they’ll have to consolidate,' she said."

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Publication Date: 9/1/2022

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