Student Loan Forgiveness Opens: How NJ Borrowers Can Apply

NEW JERSEY — The application process opened for the student debt cancellation program President Joe Biden announced last August. That means those eligible among New Jersey's 1.2 million borrowers can begin the process for receiving up to $20,000 in relief.

Here's how to apply:

1. Go to studentaid.gov. In the section on student loan debt relief, click "Apply Now."
2. The form will ask for some basic personal information: name, Social Security Number, date of birth, phone number and email address. It doesn't require documentation about your income or student loans.
3. Review the eligibility rules to confirm you're a match. For most people, that means attesting that they make less than $125,000 a year or that their household earns less than $250,000 annually. If you meet the requirements, click the box confirming that everything you provided is true. Keep in mind that the Biden administration rescinded eligibility from some who previously qualified for relief.
4. Click "Submit."
5. After submitting the form, the Biden administration says it should take four to six weeks to process. The U.S. Department of Education will use its existing records to make sure your loans are eligible and to look for applicants who might exceed income limits. Some applicants will be asked to provide additional documentation to prove their incomes. The Education Department estimates that the verification application will take about 30 minutes, including time to review and upload tax documents.

Most borrowers who apply before mid-November should expect debt cancelation before Jan. 1, when payments on federal student loans are scheduled to restart after a pandemic pause. But the deadline to apply is Dec. 31, 2023.

The student loan forgiveness program, announced in August, provides eligible Pell grant borrowers with up $20,000 in debt relief and $10,000 in debt relief for others.

Individuals who made less than $125,000 and families with incomes of less than $250,000 in 2020 or 2021 are eligible to apply. Income is based on adjusted gross income as reflected on federal tax returns, a figure that tends to be lower than total income. The adjusted gross income is found on line 11 on IRS Form 1040.

The program costs about $400 billion. Comparatively, the Paycheck Protection Program forgave $742 billion of the $793 billion in loans provided, according to ProPublica.

Things could get more complicated, depending on the outcomes of several legal challenges against the relief program, including a lawsuit from six Republican-led states. A federal judge in Missouri is weighing the states' request for an injunction to halt the plan. President Biden said he's confident that the lawsuits won't upend the program.

"Our legal judgment is that it won't," President Biden said Monday, "but they're trying to stop it."

New Jersey's 1.2 million borrowers carry a combined $42.5 billion in student loan debt — an average of $35,434 per person. Out of all the state's borrowers, 590,000 received Pell Grants, according to federal data.

The Associated Press contributed reporting.