The U.S. Department of Education officially launched their student loan forgiveness application on Monday, which allows undergraduates and graduates who have taken out federal loans in the past to be eligible for debt relief.
The relief program, which was announced in August 2021, intends to “provide more breathing room to America’s working families as they continue to recover from the strains associated with the COVID-19 pandemic,” according to the White House.
Individual borrowers with federal student loans who earned under $125,000 or couples who earned under $250,000 are eligible for up to $10,000 in debt relief, with Pell Grant recipients eligible for up to $20,000 in debt relief. Eligibility does not depend on whether borrowers finished their degree or defaulted on their loans, and only loans disbursed before June 30 of this year are eligible for relief.
Current students who filed taxes independently of their parents in 2021 and made less than $150,000 qualify for loan forgiveness. However, eligibility depends on parental income instead of personal income for students claimed as dependents.
As of Monday, nearly eight million people applied for the relief program, according to the Education Department. Eligible borrowers can apply at studentaid.gov, and the process should take roughly five minutes.
“We looked at it in beta testing on Friday night when it came out, and it is very simple. It’s name, birthdate, social security number, email address, phone number and you're just self certifying that you qualify,” said University of Wisconsin-Madison Office of Student Financial Aid associate director of awards Shane Maloney.
A beta version of the student loan application was released on Friday, allowing those applying for student loan forgiveness to fill out an application prior to the official release date.
The beta testing period was implemented to monitor the site's performance through real-world application, testing for any possible back-end bugs or crashes prior to the official launch, according to Maloney. Those who completed the beta application will not need to reapply later on but have no significant advantage in the application process, according to CNN.
However, a new guidance issued on Sept. 29 changed the eligibility qualifications to receive loan forgiveness. Borrowers with federal loans owned by a private entity were previously eligible to receive up to $20,000 in loan forgiveness but are now considered ineligible.
Specifically, two main loans fit in this category: Perkins Loans and Federal Family Education Loans (FFEL). These loans are issued and managed by a private bank but guaranteed by the federal government. Prior to the changes, borrowers could consolidate these loans into the Direct Loan Program in order to receive relief, but the Education Department quietly changed that status.
“As of Sept. 29, 2022, borrowers with federal student loans not held by [Education Department] cannot obtain one-time debt relief by consolidating those loans into Direct Loans,” stated the U.S. Education Department in a press release.
Multiple experts suspect the Biden administration made the change to avoid legal challenges from private banks, who would lose potential future profits from current borrowers when loans are forgiven through consolidation, according to NPR.
Maloney also believes the Biden Administration made this change to avoid future lawsuits.
“My understanding with what the Biden Administration is doing, is pulling back and saying, 'Okay, we're going to get through with what we can get through without challenges, and then we’re going to look back at figuring out how to work this,’ ” Maloney said.
The Biden administration’s debt relief program received a number of lawsuits in an attempt to block the forgiveness program. Six states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — jointly filed a lawsuit that argues the forgiveness program is aggressive and unconstitutional. That lawsuit was dismissed by a federal judge on Thursday, according to POLITICO.
The Wisconsin Institute for Law & Liberty (WILL) also filed a federal lawsuit challenging the loan forgiveness program on behalf of the Brown County Taxpayers Association (BTCA).
The lawsuit claimed Biden’s executive action violated constitutional rights to equal protection under law and asked a federal court to temporarily halt student debt relief until the court made a full decision.
“The President has no authority to order a wholesale forgiveness of student loans, costing taxpayers over a trillion dollars. Whether this plan is good for America is for Congress to decide,” WILL president and general counsel Rick Esenberg said in a press release.
The Biden administration’s relief program will cost the federal government roughly $400 billion, which is mainly sourced from taxpayer dollars, according to a Sept. 26 report from the Congressional Budget Office.
A federal judge denied WILL’s lawsuit on Oct. 6, ruling the organization did not demonstrate enough evidence to prove it suffered “irreparable harm” from the debt forgiveness plan, according to the Milwaukee Journal-Sentinel.
In response, WILL filed an emergency motion for injunction on Oct. 11 with the 7th U.S. Circuit Court of Appeals.
WILL filed another motion with the U.S. Supreme Court on Wednesday, asking the Supreme Court to “temporarily halt” the program until lower courts decide on its legality. It’s the first legal challenge of student loan forgiveness to reach the Supreme Court.
The group sent their request to Supreme Court Justice Amy Coney Barrett for consideration, but Barrett denied it on Thursday without referring the matter to the full court, according to SCOTUSblog.
The student loan forgiveness application remains live despite lawsuits. UW-Madison students and alumni can gain additional student loan forgiveness resources through the Office of Financial Aid’s website. The application portal will close on Dec. 31, 2023.
Editor's Note: This article was updated at 9:15 p.m. on Oct. 20 to reflect the denial of two legal challenges to Biden's student loan forgiveness plan.