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Student loan forgiveness: Borrowers could see relief before December, Biden admin confirms

Student loan borrowers gather near The White House to tell President Biden to cancel student debt on May 12, 2020 in Washington, DC.
Paul Morigi | Getty Images

In the hours following President Joe Biden's historic announcement on student loan forgiveness, millions of people flooded the internet with questions about the plan: Am I eligible? Where do I apply? When will I see relief? 

Now one of those questions has a clearer answer. Borrowers can expect to see relief before the end of the year: During a Friday press briefing, Bharat Ramamurti, the National Economic Council deputy director, told reporters that the application for loan forgiveness will become available in early October. Borrowers should see relief 4 to 6 weeks after submitting their paperwork, Ramamurti said, according to Business Insider.

Borrowers are advised to apply before Nov. 15 in order to receive relief before the payment pause expires on Dec. 31, an Education Department spokesperson told CNBC Make It, but borrowers who don't apply before the Dec. 31 deadline will still be eligible for relief.

Roughly 37 million borrowers will qualify forgiveness under the plan, CNBC reports. The administration is canceling to $10,000 in federal student loans for those making less than $125,000 a year for individuals or $250,000 for married couples or heads of households, and up to $20,000 for Pell Grant recipients who meet the income threshold. Private loan holders are not included in the plan. 

Still, some policy experts and loan servicers warn that delivering relief to borrowers could take longer.

Relief is 'not going to be immediate'

  • There's no blueprint for the administration to follow because no other president has attempted to implement wide-scale student loan forgiveness at this scale before — because of this, the administration is being "slow and thoughtful" about the details of the plan, Scott Buchanan, executive director of the Student Loan Servicing Alliance, tells CNBC Make It
  • Loan servicers "don't have a magic loan forgiveness button we can just hit when the president makes an announcement," he adds. "We need to build the infrastructure to execute this, and that takes time." 
  • Borrowers should prepare for the possibility that it could take "months" after submitting their application to see relief, Michelle Dimino, a senior education policy leader at public policy group Third Way, says. "This is an enormous administrative lift …. It's not going to be immediate." 

Legal hurdles could further delay loan forgiveness 

  • In a memo released with Wednesday's announcement, the U.S. Department of Justice said that the administration has "sweeping authority" to provide targeted debt cancellation under the HEROES Act of 2003. The act allows the Secretary of Education to reduce or eliminate borrowers' debt in the event of a natural disaster, a national emergency, and other extraordinary circumstances. According to their definition, the Covid-19 pandemic counts as a national emergency.
  • Dimino and other experts, however, expect legal challenges to the plan over Biden's executive authority to make such a decision without congressional action and new legislation. 
  • Such legal challenges could stall any relief "even further," she adds. 

This article has been updated to include comment from the Department of Education.

Check out:

How to check if you qualify for Biden's new student loan forgiveness plan

Should you request a refund on student loan payments made during the pause? Expert says 'not yet'

Biden announces new plan to cut some student loan payments in half

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