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Student Loan Forgiveness Timeline: When Will You Actually Get Debt Relief?
By Kaitlin Mulhere, Mallika Mitra MONEY RESEARCH COLLECTIVE
Debt cancellation won’t happen automatically for everyone.
Now that student loan forgiveness is a reality, borrowers want to know: What’s the timeline for their debts to be cancelled?
On Wednesday, President Joe Biden announced a plan to cancel $10,000 in student loan debt for borrowers whose annual income is less than $125,000 (or under $250,000 for married couples or heads of households). Pell Grant recipients will receive $20,000 in forgiveness, according to the administration. The plan also extends the pause on student loan payments to Dec. 31, 2022.
The move comes after months of back and forth in the White House — including the concern that forgiveness would make inflation even worse — and speculation around whether Biden would fulfill his campaign promise to forgive some student loan debt.
But just as Biden’s promise was murky, so is an understanding around when, exactly, borrowers can expect student loan forgiveness to actually happen.
Here’s what to expect about the timing of the Biden Administration’s plan to relieve borrowers of some loan debt.
Student loan forgiveness timeline
Just because an announcement was made today doesn’t mean your loans are automatically forgiven.
The Education Department says it will announce more details on how and when borrowers can claim this relief “in the weeks ahead.” Information regarding the application for forgiveness will be made available no later than the end of the year, when federal loan repayment pause ends, according to a news release from the department published Wednesday.
“In the coming weeks the Department of Education will lay out in detail a short and simple form to apply for this relief,” Biden said during a press conference Wednesday afternoon.
A fact sheet released by the White House says that, “The Department of Education will work quickly and efficiently to set up a simple application process for borrowers to claim relief.”
If the Department already has your income information from income-driven repayment plans on file, you may be eligible to automatically receive relief. There are nearly 8 million borrowers in that camp, according to the news release.
Since it’s unclear exactly when you’ll receive guidance about student loan forgiveness, it’s important to have your information — like your address and email address — up to date with your loan provider. (You can determine who exactly your student loan provider is via the Education Department’s website.)
There will probably be months between the announcement and an actual change for borrowers, says Lanae Erickson, the senior vice president of social policy, education and politics at think tank Third Way. Plus, when borrowers have to actively apply to get something, it takes a long time, she told Money earlier this week.
“It’s going to be a long road,” Erickson says.
Biden could face possible lawsuits
There’s also the added complication that Biden’s plans could be challenged and struck down in court — something Erickson is concerned about.
Robert Kelchen, a professor and head of the department of educational leadership and policy studies at the University of Tennessee, Knoxville, weighed in on the possibility on Twitter.
“Let the lawsuits begin over presidential authority,” Kelchen wrote. “I wouldn’t count on forgiveness happening for a while, and it may go to the Supreme Court.”
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Student Loan Forgiveness: Here’s Who Qualifies Under Biden’s Plan
Kaitlin Mulhere is Money's higher education editor, focusing on student debt, college affordability, and the payoff of different postsecondary programs. She also runs Money's annual Best Colleges ranking. She previously wrote for Inside Higher Ed and The Keene Sentinel in New Hampshire. She's a graduate of the University of Florida's journalism school.
Mallika Mitra is a reporter at Money covering investing trends and cryptocurrency. Previously, she covered municipal finance at Bloomberg News and personal finance and retail at CNBC. She received her masteru2019s degree from the Craig Newmark Graduate School of Journalism at CUNY and bacheloru2019s degree from Kalamazoo College.