Updated September 17, 2022 at 1:31 PM ET
President Biden's student loan relief plan could fully erase the debts of an estimated 20 million borrowers. Emphasis on "could," because, with the exception of some 8 million borrowers who already have income information on file with the U.S. Education Department, everyone else will need to fill out an application attesting to their income before their debts can be canceled.
Millions of borrowers are anxiously awaiting that mysterious application, expected in October. The wait has stirred questions and confusion from our readers and listeners, and this week, NPR had a chance to put some of those questions to U.S. Secretary of Education Miguel Cardona, during the Pittsburgh stop of his back-to-school bus tour.
When to expect the student loan relief application
First, a reminder of the highlights of Biden's plan: Borrowers who earn less than $125,000 a year, or couples earning less than $250,000, can qualify to have up to $10,000 in federal student loans canceled. Borrowers who received a Pell Grant to attend college, because they were lower income at the time of attendance, qualify for up to $20,000 in debt relief. And, even if they qualify, most borrowers will have to fill out an application to prove it.
NPR: The application is coming in early October. Can you give borrowers a realistic sense of how long they should expect to wait, once they submit that application, before they can expect to see their debts erased?
Cardona: Look, this is unprecedented. Just like there was no playbook for reopening schools, there was no playbook sitting anywhere on how to [cancel student loans]. But we're going to do it, and we're going to do it better than people expect.
We want to make sure that it's a simple process, an easy process where those who are eligible get the loan relief that they are entitled to. So, early October, and we expect the process to be a smooth process, a simple process, a quick process.
While I'm not going to share timelines right now, I will tell you, [by] January 1 when [loan repayment resumes], we have to have all that set up. So we know that, between October and before the loans restart, not only is the information going to be needed by all borrowers, but we're going to have to be done with that process.
NPR: I've heard from a lot of borrowers who have been getting phished in this interim moment – between President Biden's announcement and the October release of the application. Is the department doing – or can it do anything – about the profiteers out there?
Cardona: We know there are a lot of bad actors out there, even in education. That's why we've gone after [predatory for-profit colleges like] the Corinthians, the I.T.T.s. And what we're telling folks, "Go to our website, studentaid.gov/debtrelief, to get information. And don't go anywhere else. Don't open up those emails. Don't."
Our [Federal Student Aid] team is working really hard to make sure that we make the process simple and clear, and we're directing folks to come to our website. They can sign up there for an automatic email so that we're sending information to them from our official websites.
But you're absolutely right: There are bad actors out there. What we want to do is make sure that we're taking that into account when we're coming up with the planning on how to roll it out.
NPR: Why announce this [debt relief plan] before there's an application?
Cardona: It was really important that the president communicate on this topic that was critically important to do. And we couldn't create an application if it hadn't been a policy that the president would have put forth. Right?
With that said, we're going to make the process simple. We're going to make the process quick, and we recognize the user experience matters.
Look, you know, when you think of loan processing, that's not something that makes people think, 'Oh, easy process.' We're going to try to do our best to change that perception, make it simple so that folks can get on with their lives and not be mired down in trying to take advantage of this benefit.
The upcoming deadline on Public Service Loan Forgiveness
At this point in the interview, we jumped to the Public Service Loan Forgiveness (PSLF) waiver. The Biden administration used this waiver to overhaul the troubled program last year, making it easier for borrowers who work in public service to qualify for debt relief after 10 years. But that limited waiver is set to expire at the end of October, raising concerns that thousands of borrowers who qualify won't apply in time.
In fact, Cardona's bus tour this week included workshops designed to help teachers through the PSLF application process.
NPR: Do you think you're going to be able to get that PSLF waiver extended or should folks be working on the assumption it's done November 1?
Cardona: Look, Public Service Loan Forgiveness – talk about fixing a broken system. Ninety-eight percent of those who were applying for it were being denied. We're talking teachers, nurses, those who are stepping up during a pandemic. We provided that waiver, a one year waiver to create a wider net for people that were misguided in the past, lied to in the past, so they can take advantage of it now.
That waiver does end October 31, and we're pushing really hard to get that information out. So for those of you who are not sure about it, I would say apply for that. It's better to get your name written down there and then find out later that maybe you didn't qualify than to be eligible and not sign up.
So, PSLF.gov. More than 175,000 people have benefited from it. Over $10 billion in loan relief for those people who made a career choice to serve the public. We want to make sure we're taking care of them and we got their backs just like they're taking care of the community.
A response to borrowers who are concerned about past mismanagement of student aid programs
For our last question, we pointed to multiple NPR investigations into the ways the department and its loan servicing companies grossly mismanaged previous federal student aid programs, including TEACH Grant, PSLF, Total and Permanent Disability Discharge and income-driven repayment.
While many borrowers are hopeful the administration will make good on its latest debt relief plan, they are also justifiably skeptical – even cynical – about the Education Department's ability to pull it off.
NPR: What do you say to borrowers right now who may be excited but also worried about being too hopeful – because they just don't trust that the system's going to work?
Cardona: Well, look, we recognize how many moving parts are here. And we've been thinking about this for many, many months. We're working with our loan servicers. We're communicating with them daily. We have update meetings daily. And we're making sure that when we roll this process out, it can be smooth. And that's the expectation. The president campaigned on $10,000 [of relief per borrower]. [He's also] delivering $20,000 for those who are eligible for Pell.
Now we have to deliver.
(This interview has been lightly edited for clarity.)
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