The White House said Friday that student loan borrowers will be able to apply for debt cancellation this fall and receive relief within four to six weeks.
The announcement arrives days after Biden said he would cancel up to $10,000 in federal student loan debt for borrowers who earn less than $125,000 per year, or less than $250,000 for married couples. Those who received Pell Grants, federal aid for lower-income students, could see up to $20,000 in forgiveness.
In the wake of the news, borrowers have been clamoring for more information, peppering student loan servicers with questions and crashing the Education Department’s website. Details of the plan continue to emerge from the Biden administration, giving borrowers a clearer understanding of how relief will work.
Once the application is out, Ramamurti said borrowers should apply by Nov. 15 to have their balances lowered or eliminated before the student loan payment pause ends on Dec. 31. The Education Department, he said, will process applications on an ongoing basis even after payments resume.
Roughly 8 million borrowers, whose income is already on file at the department, will have their loans automatically forgiven without having to apply. Everyone else can sign up on Studentaid.gov to be notified when the form goes live.
The White House estimates that nearly 90 percent of relief will go to people earning less than $75,000 and that roughly 20 million borrowers could have their debt completely canceled.
In all, about 43 million people could see some level of forgiveness, officials said.
“This plan will lift a large weight from tens of millions of Americans, people who came, by and large, from working families and who are working class now,” Ramamurti said. “By lifting this weight, we are not only benefiting them and their families, we are benefiting the communities that they live in and the economy as a whole.”
Opponents of the plan continue to assail its fairness and the potential costs. On Friday, Ramamurti provided the first official cost estimate for the program. He said it would reduce average annual revenue in the student loan program by $24 billion a year over the next decade. That would effectively cut in half the amount of money the White House estimates it will collect once student loan payments resume in January.
“Because we are providing debt relief, reducing the outstanding balance for some people, eliminating it for other people, that means we’re not going to be collecting a certain amount of payments that we would have,” Ramamurti said. “That represents 1.5 percent of the deficit reduction that we are projecting for this fiscal year before the announcement. And it is far less than the $350 billion-plus that we’ve already done in PPP loan forgiveness since last July.”