EDUCATION

Biden administration kicks off student loan debt forgiveness process

Sep 30, 2022, 9:00 AM
US President Joe Biden announces student loan relief on August 24, 2022 in the Roosevelt Room of th...
US President Joe Biden announces student loan relief on August 24, 2022 in the Roosevelt Room of the White House in Washington, DC. - Biden announced that most US university graduates still trying to pay off student loans will get $10,000 of relief to address a decades-old headache of massive educational debt across the country. Photo credit: OLIVIER DOULIERY/AFP Getty Images

  (CNN) — The Biden administration on Thursday kicked off its efforts toward forgiving student loan debt, sending updates on the process via email before the window to apply opens next month.

In August, President Joe Biden announced his decision to cancel up to $10,000 in student loan debt for individuals making less than $125,000 a year or as much as $20,000 for eligible borrowers who are also Pell Grant recipients.

An email from the Department of Education sent to Americans who signed up for updates and obtained by CNN Thursday offered some details on who is eligible and what to expect in the process.

“In October, the US Department of Education will launch a short online application for student debt relief. You won’t need to upload any supporting documents or use your FSA ID to submit your application,” the email said.

It continued, “Once you submit your application, we’ll review it, determine your eligibility for debt relief and work with your loan servicer(s) to process your relief. We’ll contact you if we need any additional information from you.”

The email said that additional updates would be sent “over the coming days” but did not provide a specific date in October for when the application window will open. It will extend through December 2023. It also warned readers to “beware of scams.”

“You might be contacted by a company saying they will help you get loan discharge, forgiveness, cancellation, or debt relief for a fee. You never have to pay for help with your federal student aid. Make sure you work only with the US Department of Education and our loan servicers, and never reveal your personal information or account password to anyone,” it said.

The Department of Education is “working closely” with the White House through the implementation process, a spokesperson for the department said, and is meeting daily.

“Our goal is to provide borrowers a seamless and simple experience, working closely with the servicers who will actually process the relief,” the spokesperson said in a statement to CNN.

Biden’s student debt move opened new divisions both inside his party and out. While some supporters hailed the decision, progressives say it didn’t go far enough, some Democratic economists warned it could worsen inflation but other economists say the combined impact will be minimal on the economy at large while Republicans say it is unfair and costly. The nonpartisan Congressional Budget Office said in a report Monday that the cancellation could come at a price of $400 billion, but noted that those estimates are still “highly uncertain.”

The White House argues that the cost should be viewed over a 30-year time period.

And in one of the first significant legal challenges to the loan forgiveness plan, a federal judge on Thursday rejected a bid to block the Biden administration’s plan.

In doing so, US District Judge Richard Young hinted that there were likely procedural issues in the lawsuit that would make it difficult for the legal challenge against the policy to move forward.

A public interest lawyer had filed the lawsuit Tuesday, arguing that the policy is an abuse of executive power. Plaintiff Frank Garrison claimed that because of the forthcoming student loan forgiveness, he would be forced to pay state taxes on the amount canceled — an expense he would otherwise avoid.

The lawsuit, which named the Department of Education as a defendant, challenged the agency’s “unacceptable abuse of executive authority to restore the rule of law and to enforce the Constitution’s separation of powers,” according a press release from the Pacific Legal Foundation.

White House spokesman Abdullah Hasan said in an emailed statement that “the claim is baseless for a simple reason: No one will be forced to get debt relief. Anyone who does not want debt relief can choose to opt out.”

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