How to Take Advantage of Biden’s Student Loan Forgiveness If You Have Navient or Sallie Mae Consolidation Loans

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I wanted to test the whole process to make sure it worked before writing this article, but with Labor Day coming up and we’re running out of time, I’m going to write it now. Last week, when I wrote about the angry reaction to President Biden’s student loan forgiveness plan, I described my particular loan situation as thinking that – despite having been repaying my loans for two decades – I didn’t I wouldn’t get any benefit from it. Butyou can learn a lot from the reviews, and Agent Sculder alerted me to a fix. Thank you (and anyone who didn’t know and may also benefit can thank Sculdertoo).

Many years ago, I consolidated my student loans with a private company (in my case, Sallie Mae, although Navient at one point took over the loans) to reduce my monthly loan payment. I thought that was a good thing, and I understand that’s the case for a lot of Gen Xers and Elder Millennials (several others in the comments section echoed this). If your loans are owned by private companies like Navient and Sallie Mae, you probably haven’t even been able to take advantage of the break in loan repayments over the last two years because, like me, you were young and poor and you had attracted by the offer of lower monthly payments.

However, that doesn’t mean you can’t take advantage of student loan forgiveness. What you need to do – and it’s a lot easier than I thought – is consolidate your loans Again by filling out a Federal Direct Consolidation Loan Application. If you don’t have an account on the Federal Student Aid website—and I didn’t, because I didn’t have any federal loans—it’s easy to create one. here, although you have to wait one to three days to wait for the Social Security Administration to verify your identity (I received the verification the same day). Everything is done electronically, unlike the old days when we had to do everything by post and it took two months to do anything.

Once you have an account, it will list all of your existing private loans. Your entire student loan history is available here so you don’t have to scramble and try to find documents from ten years ago in a drawer you forgot. There’s no credit check, no employment verification, and no cosigner needed (you’ll need to provide some references). The form takes 10-15 minutes to complete, and it will even provide an estimate of your monthly payment amount. It also lets you choose the payment plan you want (standard, graduated, income-based, etc.).

That’s it. You fill it out and wait for your new federal loan department to approve it (and you can choose whatever new company you want – I went with Nelnet). I applied four days ago and received an email today saying my loan would be processed on October 20th. The execution process therefore takes just under 2 months. Once approved—and I think it’s guaranteed—you’re eligible for all of these new benefits. If you’re on a Pell grant — and your dashboard will tell you if you are, in case you forgot — you’ll get $20,000 deducted from your student loan balance, provided you do all before December 31, 2022. If you are not a Pell Grant recipient, you will still receive $10,000 cleared.

You can also take advantage of the other benefits of the program. If your original balance was less than $12,000 and you’ve been paying for 10 years, you’re done! Your debt will be erased. If you choose the income-contingent repayment plan, you’ll also only have to make monthly payments based on 5% of your discretionary income (instead of 10%), and if that payment doesn’t cover interest on your loan, the government will pay that too! In fact, if you only earn the equivalent of $15 per hour, your payments will be $0 per month, and of no interest will accumulate. Holy shit!

Biden’s fact sheet even offered this example (which I know applies to at least one commentator):

A typical single public school teacher with an undergraduate degree (earning $44,000 a year) would only pay $56 a month on his loans, down from the $197 he currently pays under the latest plan. income-based reimbursement plan, for annual savings of nearly $1,700.

Again, not only will your monthly payment be reduced from $197 to $56, but the government will pay the unpaid interest so your loan amount is not actually increase while you pay them back. In the first 10 years out of school, it would have been huge for me.

I did all of this in less time than it took me to write this post.

Meanwhile, my wife — who has worked for a nonprofit since she started working — will also apply for the public loan forgiveness program, which will completely forgive your loans if you’ve made 120 payments. Do you work for a government organization at any level, or with a non-profit organization that is tax-exempt under IRS section 501(c)(3)? Then you should qualify, and if you’ve worked in one of these jobs for a decade, you can get the rest of your loans wiped out. Boom!

However, you will need to reapply by completing a Federal Direct Consolidation Loan Application. This time you need to change loan provider to MOHELA. Once you have consolidated into a federal direct consolation loan, you can take advantage of the PSLF. You need to act fast on this one, though, because after consolidating your loans under the Direct Lending Program, you’ll only have until October 31 to complete the PSLF form and certify your employment. It’s less than two months away, so use this weekend wisely.

If all of this was stupidly obvious to you, great! Congratulations, Smarty Pants! But if you’ve been paying by direct debit for 15 years and never paid attention to your private student loans because you assumed they wouldn’t be discharged until death, I hope this article helps you take advantage of the new benefits. Thank you Biden!


Dustin is the founder and co-owner of Pajiba. You can email him here, follow him on Twitteror listen to his weekly TV podcast, Podjiba.



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