Now that President Joe Biden has officially announced plans to cancel $10,000 in student debt, many are anxiously scrolling the internet to check that it does indeed apply to them.
After months of deliberations and the White House delaying the decision amid both criticism and pressure, those earning less than $125,000 are eligible to have up to $10,000 of their student loan balance wiped.
"In keeping with my campaign promise, my administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023," President Biden tweeted on Wednesday afternoon.
A pandemic-related pause on payments that had been extended several times and was set to end on August 31 has also been extended until December 31, 2022 for what Biden said was the "final time."
Student Loan Forgiveness Applies To Most
Biden's announcement is unprecedented due largely to its large scope -- 48 million Americans currently have some form of student debt, and 43 million of those will be eligible for debt forgiveness.
Aside from the $125,000 income cap, the most important point to note is that the forgiveness program only applies to federal student loans. While 92% of all student debt in the country comes from the government, some do have to supplement the cost of their education (or living expenses while in college) with private lenders.
Those who received Pell Grants, which are given out to the students from low-income families, are eligible for an additional $10,000 in debt forgiveness for a total of $20,000.
Current students making payments and those who left school without receiving a degree also qualify so long as they are not filed as a dependent on somebody else's tax return.
Those living as a household also need to earn below a collective $250,000 to be eligible.
Stay Tight And Beware Of Scams
For a large portion of people, there is nothing that needs to be done -- if you have been making regular repayments and submit annual tax returns, your loan servicer will reach out with an announcement or instructions in the coming weeks.
For those who may be behind, the best thing to do is to log into your federal loan account and make sure everything is up to date.
The Department of Education confirmed that an official application for those not automatically informed will be made available before the repayment deadline runs out.
That said, processing 43 million loans will take time and glitches are inevitable.
So are, unfortunately, scammers that may try to seize the long transition period to try to do bad things. Reports are already emerging of scammers pretending to come from the Department of Education trying to get one's social security number.
Another common scam looks like an email that asks former students to pay a fee of around $50 to "process" their debt cancellation.
As the payment pause has been extended, it is probably best to hold tight and wait for further information from their loan servicer and the Department of Education.
Those with less than $10,000 may get an official confirmation of a wiped balance while others should get a billing notice by the time the first payment on the adjusted balance is due.
But as the government never does anything fast, it is best to hold tight and be suspect of emails that come in a matter of days rather than months.
"In general, you should be wary of companies that reach out to you first, promising instant or complete loan discharge or forgiveness," Stephanie Colestock wrote for CBS' MoneyWatch. "These scams often imply limited-time offers or request your immediate attention. You may also be able to spot a scam if the correspondence has grammatical errors or unusual punctuation."
