WASHINGTON– Millions of Americans are expected to be able to take their first steps within days to forgive up to $20,000 in debt under President Joe Biden’s federal student loan forgiveness program — a multibillion-dollar initiative promoted by acclaimed by proponents, but is already facing legal challenges.
The Biden administration announced in August that single borrowers earning less than $125,000 will be eligible for debt relief on $10,000 of debt loans, while married couples will be eligible for that amount if their combined income is below $250,000 (calculated using 2020 or 2021 adjusted gross income). ).
Recipients of Pell grants — which the government says are intended for people with “extraordinary financial needs” — are eligible for an additional $10,000 cancellation, or a total of $20,000.
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Of the 43 million federal student borrowers who have accumulated more than $500 billion in debt, most have to fill out an application to see if they qualify for forgiveness. According to the White House, only about 8 million of these borrowers will have their debt automatically forgiven because the Department of Education already has their income information.
On Thursday, the Biden administration quietly excluded some borrowers from Perkins loans and Federal Family Education Loans (FFEL). Both groups qualified earlier for the loan foreclosure. While a total of about 4 million Americans have these loans, an administration official told ABC News that only about 770,000 people will be affected by the change.
At a Sept. 26 briefing, White House press secretary Karine Jean-Pierre said there would be more updates on the application process “very soon.” The administration assumes that the “simple procedure” will be opened at the beginning of October.
External experts are rather skeptical that the program will run smoothly.
“When you see the large number that the government projects will benefit from this initiative, it all depends on people being able to take these steps and apply this debt relief to their account in a way that actually works,” said Mike Pierce, executive director of the Student Borrower Protection Center, an advocacy group.
Here are the key dates and details for applying for student loan forgiveness
Early October: Loan Forgiveness Applications open
Student loan cancellation requests will be released in early October, according to the DOE, although a more specific date has not yet been confirmed.
The department recommends that everyone apply, including those who may already qualify for automatic forgiveness.
To be notified when the process has officially opened, the department encourages borrowers to sign up on their subscription page. (Private companies like Navient and Nelnet, which help manage loans and repayments, also direct borrowers to a government portal created to share student loan updates.)
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How many of the 43 million borrowers will apply is unclear. In cost estimates, the White House has said it could be up to 75% of eligible individuals or as little as 50%.
“It’s all going to depend on how well we educate about this opportunity and make sure people actually put their hands up to stand in line to cancel their debt,” Pierce said.
November 15: The recommended application deadline
DOE officials are recommending that borrowers apply for student loan forgiveness by Nov. 15 to receive relief before the pandemic-era payment pause expires on Dec. 31 and interest begins accruing again.
The department said they expect a four to six week turnaround time for forgiveness.
But some proponents, like Pierce, worry it may not be feasible given the federal government’s track record of handling debt relief.
The DOE has not released details of a plan for borrowers whose applications are still being processed until the end of the payment pause after December.
January 1: Student loan payments resumed
On January 1, regular student loan payments will resume after a three-year moratorium first enacted under President Donald Trump during the COVID-19 outbreak. If a borrower’s entire balance is not erased through the federal forgiveness program, interest will begin accruing again on the remaining balance.
Dec 31, 2023: Program application ends
The application deadline for student loan waiver is December 31, 2023.
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https://abc13.com/student-loans-loan-forgiveness-application-debt-relief-department-of-education/12294633/ Is the Student Loan Forgiveness Application Open? Important dates, steps borrowers can take to eliminate student debt