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: What you need to know about the student loan forgiveness application as millions apply

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Student loan borrowers who believe they’re eligible for debt relief under the Biden administration’s cancellation plan are now one step closer to having their debt discharged, though potential obstacles to the forgiveness still remain. 

The application borrowers can use to apply for student debt relief is now live, President Joe Biden said this week. The announcement comes after months of anticipation from borrowers. In August, Biden said his administration would wipe away up to $10,000 for student loan borrowers earning up to $125,000 as well as an extra $10,000 for those who used Pell grants to attend college, but offered few details, including how borrowers would access the relief. 

The application process is one that both advocates and opponents of the debt relief plan will be watching closely. Almost immediately after Biden announced the policy, critics began strategizing legal challenges to the relief, several of which remain ongoing. At the same time, some advocates derided the Biden administration’s decision to means test the relief, saying that it could make it difficult for the most vulnerable borrowers to get the cancellation they’re entitled to. 

What’s your experience with applying for student loan forgiveness? We want to hear from you. Email jberman@marketwatch.com

Mike Pierce, the executive director of the Student Borrower Protection Center, was one of the advocates initially concerned that the administration’s plan to require borrowers to fill out a form to receive relief would create an obstacle that could be difficult for many to overcome. That worry was based on a body of research surrounding administrative burden, which indicates that for programs geared towards low-income people, the government often requires many steps that are so complex they can discourage those eligible from applying. His experience working with low-income borrowers who could get knocked off track due to this administrative burden confirmed the research findings. 

“Everything you worry about with administrative burden doesn’t go away with a simple form,” Pierce said. Still, he’s pleased with how easy it’s been for borrowers to apply so far. Eight million borrowers filled out the form over the weekend, when the Department of Education launched a beta version of the application, Biden said. The portal handled the applications, “without a glitch or any difficulty,” the President added. 

In the day following the official launch of the portal, another 4 million borrowers filled out the application, Biden said Tuesday. 

That the form is so simple — all borrowers need is basic information like their name, date of birth and Social Security number — “is an achievement despite the fact that it shouldn’t happen at all,” Pierce said.  

Abby Shafroth, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, said the form was “light years ahead of any other student loan application I’ve seen in the past.” And indeed, borrowers and advocates have complained for years that other relief programs, like Public Service Loan Forgiveness, have been difficult to access due in part to the complexity of the paperwork required.

The administration’s process for broad-based debt relief gets rid of some of the biggest obstacles to borrowers filling out student loan paperwork, by, for example, not requiring borrowers to input their FSA ID, the username borrowers typically use to access their information on the Federal Student Aid website. “That’s been a huge barrier in my experience working with borrowers,” Shafroth said. 

Still, she said she does have some concerns about the process broadly. Most borrowers won’t have to provide income documentation to receive relief, but in order to prevent fraud, the Department of Education will be flagging some borrowers and asking them for more documents to verify that they’re eligible. Shafroth said she worries that some borrowers who are asked for more documents could miss the request. 

“That has been a big worry in the past and a problem with the most vulnerable borrowers accessing debt relief — when they have to be on the lookout for subsequent paperwork,” she said. “I hope that they find creative and effective ways to make sure that borrowers get the communications.”  

Borrowers who completed their application shouldn’t expect to have their debt canceled right away. A senior administration official told reporters in October that they expect the time from the completion of the application to debt discharge to happen in “a matter of weeks” for most borrowers. Officials have encouraged borrowers to apply by mid-November in order to have their debt canceled before payments are scheduled to resume at the start of the year. Borrowers have until December 31, 2023 to apply. 

As part of a legal battle between six GOP-led states and the federal government over the debt relief plan, the Administration has also said it won’t discharge any loans before October 23. The states have argued that broad-based student debt cancellation represents an overreach by the executive branch. They’re seeking to stop the program immediately as the case winds through the court system and ultimately to end it overall. The suit is one of several over the plan. 

The legal challenges have likely already put some borrowers at risk of not receiving relief. Last month, the Department of Education updated its website to indicate that borrowers with federal loans that are held by private entities can’t consolidate their debt into another type of federal loan to qualify for relief. Legal experts have said officials likely took that step to make it more difficult for plaintiffs with ties to entities that own those loans to sue over the program. 

Despite the litigation, Biden administration officials have said they’re “moving full steam ahead,” to implement the program. When asked whether he thought the lawsuits could jeopardize the relief program, Biden said, “our legal judgment is that it won’t.” 

The Tell: One of Wall Street’s most vocal bulls is scaling back his bullish calls on stocks and trimming risk in his bank’s model portfolio. Here’s why.

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