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The Biden-Harris administration released an email to borrowers on Thursday, letting them know what to expect as applications for student loan debt relief open in October.
In what the administration called the first of “regular updates” to borrowers, the email detailed the process for applying and reminded recipients of their eligibility.
The application will be a short online form, and applicants won’t need to upload any documents or use their Federal Student Aid ID (FSAID) to apply.
While the email didn’t specify when exactly in October the application for student loan debt relief will open, it noted that the application window will remain open for more than a year: from October 2022 to the end of December 2023.
In total, borrowers are eligible for $10,000 in federal student loan forgiveness, along with an additional $10,000 for borrowers who received Pell Grants to attend college.
“Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for households,” the Biden-Harris administration stated.
Application for student debt relief opens in October
The email added that once a borrower submits their application, FSA will review it and determine the applicant’s eligibility. The agency will work with the borrower’s loan servicer to process the relief and will reach out to the borrower directly if more information is needed.
Notably, roughly 8 million borrowers won’t need to do anything to receive their relief because the U.S. Department of Education already has their relevant income data.
“Our goal is to provide borrowers a seamless and simple experience, working closely with the servicers who will actually process the relief,” the administration stated.
Thursday’s email update comes months after Biden made the historic announcement to cancel some student debt in August. And it comes just over a month ahead of midterm elections, when the popularity of the student loan debt relief plan will be tested.
Student debt relief plan not celebrated by all
Some on the left have criticized the plan for not going far enough to remove burdensome debt from a generation of Americans.
With the cost of college rising astronomically in the last couple decades, a combined 40 million Americans owe roughly $1.7 trillion in student loan debt.
Progressives for months have urged Biden to cancel $50,000 or all student loan debt as a way to ramp up economic activity and support working families. And a study from Brookings notes how student loan debt contributes to the racial wealth gap between Black and White Americans.
“It’s about time we make higher education accessible and affordable to all because we are all worthy of pursuing the American dream, regardless of our race, ethnicity, income or who our families are,” Shadelle Gregory, an associate at Fitzhugh Mullin Institute wrote for the Hill in August.
Meanwhile, Republicans have argued that it’s an unfair decision that will contribute to rising inflation.
In mid-September, nearly half of the country’s governors, all Republicans, signed a letter to President Joe Biden asking him to withdraw his plan to cancel student loan debt, according to NPR.
“College may not be the right decision for every American, but for the students who took out loans, it was their decision: able adults and willing borrowers who knowingly agreed to the terms of the loan and consented to taking on debt in exchange for taking classes,” the letter states. “A high-cost degree is not the key to unlocking the American Dream—hard work and personal responsibility is.”
Lawsuit filed against relief
In the first major challenge to the plan, a public interest lawyer filed a lawsuit against relief. Plaintiff Frank Garrison complained that by receiving student loan debt relief, he will be forced to pay state taxes on the amount that will be canceled, CNN reported.
Yet, some legal experts have shot down the lawsuit, saying that since the plan allows borrowers to opt-out of relief, the lawsuit is flawed and irrelevant.
It remains to be seen whether other last-minute attempts to block relief will pass.
Besides extending the last payment pause to October 31 and providing up to $20,000 in relief, there are other notable changes in the plan.
When it comes to new borrowers and those with balances beyond the relief, borrowers will only be required to make monthly payments at or below 5% of their discretionary income as opposed to the previous rule of 10%. It also raises the amount of income that can be qualified as non-discretionary to ensure no borrower making 225% of the federal poverty line, or roughly $15 an hour, has to make any monthly payment on their loans.
Furthermore, the US Dept. of Education will now move to forgive loans of borrowers who make regular payments after 10 years instead of the previous 20-year rule. And, perhaps most importantly, the Biden-Harris administration is moving to cover the borrower’s unpaid monthly interest, ensuring that no one’s loan amount will increase as long as they’re making their payments.
“We have confirmed that graduate student borrowers will be included in this cancellation,” said Jessica Thompson, vice president at the Institute for College Access and Success. “So again: same income thresholds, same amounts.”
For more information, visit studentaid.gov/debtrelief .