The announcement comes days after Biden announced he would forgive up to $10,000 in federal student loan debt for borrowers who earn less than $125,000 a year, or less than $250,000 for married couples. . Those who received Pell Grants, federal aid for low-income students, could see up to $20,000 in forgiveness.
How President Biden decided to move forward with student loan forgiveness
In the wake of the news, borrowers demanded more information, peppered student loan services with questions and crashed the Department of Education’s website. Details of the plan continue to emerge from the Biden administration, giving borrowers a better understanding of how the relief works.
Once the request is released, Ramamurti said borrowers should apply by Nov. 15 to have their balance reduced or eliminated before the student loan payment break ends on Dec. 31. The Department of Education, he said, will process applications on an ongoing basis even after payments resume.
About 8 million borrowers, whose incomes are already registered with the department, will have their loans automatically canceled without having to apply. Anyone can register at studentaid.gov at be notified when the form is online.
The White House estimates that nearly 90% of the relief will go to people earning less than $75,000 and that around 20 million borrowers could see their debt completely forgiven.
In total, about 43 million people could see some level of forgiveness, officials said.
Calculate the amount of your student loan that can be forgiven
Biden’s Student Loan Forgiveness Plan, Explained
“This plan will lift a significant burden on tens of millions of Americans, people who have come, by and large, from working-class families and are now part of the working class,” Ramamurti said. “By lifting that weight, we’re not just benefiting them and their families, we’re benefiting the communities they live in and the economy as a whole.”
Opponents of the plan continue to attack its fairness and potential costs. On Friday, Ramamurti provided the first official cost estimate for the program. He said it would reduce the student loans program’s average annual revenue by $24 billion a year over the next decade. That would effectively halve the amount of money the White House estimates it will collect once student loan repayments resume in January.
“Because we’re giving debt relief, reducing the outstanding balance for some people, eliminating it for others, that means we’re not going to collect a certain amount of payments that we would have,” Ramamurti said. “That’s 1.5% of the deficit reduction we expect for this fiscal year before the announcement. And that’s far less than the $350 billion-plus we’ve already paid out in PPP loan forgiveness since last July. .