WASHINGTON – In just a few days, millions of Americans are expected to be able to take the first steps to eliminate up to $20,000 in debt. President Joe Biden’s federal student loan forgiveness program is a multibillion-dollar, fan-backed initiative, but which is already facing legal problems.
In August, the Biden administration announced that single borrowers making less than $125,000 could qualify for $10,000 in federal school loan debt cancellation, while those who were married were eligible for that amount. if their combined income is less than $250,000 (calculated based on adjusted gross income from 2020 or 2021). ).
Recipients of Pell grants, designated for people with “exceptional financial need,” according to the government, are eligible for cancellations of an additional $10,000 or $20,000.
WATCH: Student loan forgiveness could help more than 40 million
Of the 43 million federal student loan borrowers who have accumulated more than $500 billion in debt, most will need to fill out an application to see if they qualify for forgiveness. According to the White House, only about 8 million of those borrowers will be automatically discharged because the Department of Education already has information about their income.
On Thursday, the Biden administration quietly excluded some Perkins and Federal Family Education Loan (FFEL) borrowers. Both groups were previously eligible for loan cancellation. While a total of about 4 million Americans have these loans, an administration official told ABC News that the changes would affect only about 770,000 people.
At a briefing on September 26, White House press secretary Karin Jean-Pierre said that there will be information about the application process “very soon”. The administration says the “simple process” will open in early October.
Outside experts are more skeptical about how smoothly the program will run.
“When you see the huge numbers that the administration predicts will benefit from this initiative, it all depends on whether people can take those steps and get the debt relief applied to their accounts in a way that actually works,” Mike said. Pierce, executive director of the advocacy group the Student Borrower Advocacy Center.
Here are the key dates and details, as of today, for applying for student loan forgiveness
Beginning of October: applications for loan forgiveness are opened
Student loan cancellation applications will be released in early October, according to the DOE, although a more specific date has not yet been confirmed.
The department encourages everyone to apply, even those who may already be eligible for an automatic pardon.
To receive notification of the official opening of the process, the department recommends that borrowers register with them subscription page. (Private companies like Navient and Nelnet, which help manage loans and repayments, also refer borrowers to government portal created to share student loan news.)
SEE ALSO: Scammers target student loan forgiveness
It is not yet clear how many of the 43 million borrowers will apply. According to cost estimates, the White House said it could be 75% of people who are eligible, or as little as 50%.
“It’s all going to depend on how well we get the word out about this opportunity and make sure that people actually put their hands up to get in line to cancel their debt,” Pearce said.
November 15: Recommended application deadline
Energy Department officials are encouraging borrowers to apply for student loan forgiveness by Nov. 15 to get help before the pandemic suspension ends on Dec. 31 and interest starts accruing again.
The department said it expects a turnaround time of four to six weeks for the pardon.
Still, some advocates, like Pierce, worry that may be unworkable given the federal government’s track record in handling debt relief.
The Economy Ministry has not released details of the plan for borrowers whose applications are still being processed until the moratorium is lifted after December.
January 1: Student loan payments resume
Regular student loan payments will resume on Jan. 1 after a three-year moratorium imposed by President Donald Trump at the start of the COVID-19 pandemic. If the federal forgiveness program does not remove the borrower’s entire balance, interest will begin to accrue again on the remaining balance.
December 31, 2023 : The program ends
The application period for student loan relief ends on December 31, 2023.
Copyright © 2022 ABC News Internet Ventures.