Biden's student loan forgiveness application is now open: What you need to know about the USD 300 billion initiative
During his political campaign, US President Joe Biden had made several promises and the forgiveness of student loans was one of them. Biden on Monday (October 17) announced the formal launch of the application for those seeking student loan forgiveness.
The Student Loan Debt Relief application is open!
— The White House (@WhiteHouse) October 17, 2022
Apply now and encourage others to take advantage of this relief. https://t.co/xxWb0YFvkM pic.twitter.com/fwU31z4aDD
What Biden said: Today, I’m announcing millions of people working and middle-class folks can apply and get this relief. And it’s simple and it’s now. It’s easy,” Biden said.
Biden in August had 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.
What does the application say?
Don't put it off — the application for student loan forgiveness is remarkably simple.https://t.co/r3fIPds7ri
— Matt Largey (@mattlargey) October 15, 2022
This is basically it: pic.twitter.com/66soKyIBWm
- Students looking for debt relief can now fill out the form in English or Spanish at Studentaid.gov.
- Just before the formal application was officially launched , a brief "beta period" over the last weekend during which its team assessed whether tweaks were needed.
- Borrowers must have federally held student loans to qualify.
During this beta period of the form which was launched for only two days, more than 8 million students applied for debt relief. Borrowers have until December 31, 2023, to submit an application.
Why Biden announced the student loan relief initiative:
1. Provide targeted debt relief to address the financial harms of the pandemic: To ensure a smooth transition to repayment and prevent unnecessary defaults, a pause on federal student loan repayment will be extended one final time through December 31, 2022. Here is the 'three-part plan'
2. Make the student loan system more manageable for current and future borrowers by:
- Cutting monthly payments in half for undergraduate loans.
- Proposing a rule that borrowers who have worked at a nonprofit, in the military, or in federal, state, tribal, or local government, receive appropriate credit toward loan forgiveness.
3. Protect future students and taxpayers by reducing the cost of college and holding schools accountable when they hike prices.
Biden dropped that student loan forgiveness application like he Drake or Beyoncé.
— aja monet (@aja_monet) October 15, 2022
Here come the lawsuits…
This debt forgiveness plan of Biden's administration did receive a lot of backlashes, along with enthusiastic welcomes.
Six Republican-led states have filed a lawsuit to prevent the plan from taking effect, saying the plan exceeds Biden's authority and will cause financial losses for student loan servicers. A St Louis-area federal court is currently evaluating the state's request for an injunction to stop the plan. The education department has stated in court filings that no debt cancellation would be completed before October 23.
On Monday (October 17), Biden admitted that legal proceedings are still underway, but he said that his administration is confident that the programme would eventually be unaffected.
Even though Biden's plan battles an increasing number of court challenges, the Biden administration is moving through with the debt forgiveness plan. The opposition claims that it is because of the upcoming midterm elections, which are scheduled for November 18, 2022.
How much would the President's plan to reduce student loan debt cost?
- On this, there are numerous viewpoints. According to estimates from the federal government, the idea would cost $300 billion over the following ten years, or around $30 billion annually. The model is based on 90% of eligible applicants filling out their forms.
- The Congressional Budget Office put that cost at about $400 billion over the next 30 years, though it added in a report that such measurements are "highly uncertain."
- The cost of the debt cancellation is expected to be around $360 billion, according to the Committee for a Responsible Federal Budget.