More Details On Student Loan Relief For Minnesota Borrowers

MINNESOTA — Student loan borrowers in Minnesota got a preview Tuesday of a website up to 40 million Americans are expected to use to apply for student loan forgiveness.

The Biden administration previewed what it called a “short and simple” website to apply for student debt relief ahead of its formal launch later this month. Borrowers would have to provide their contact information, Social Security number, date of birth and self-attest under penalty of perjury that they qualify for the debt relief.

The student loan forgiveness program, announced in August, provides eligible Pell grant borrowers with up $20,000 in debt relief and $10,000 in debt relief for others.

Individuals who made less than $125,000 and families with incomes of less than $250,000 in 2020 or 2021 are eligible to apply. Income is based on adjusted gross income as reflected on federal tax returns, a figure that tends to be lower than total income. The adjusted gross income is found on line 11 on IRS Form 1040.

With mounting legal challenges, the $400 billion program could be delayed or outright killed before the U.S. Department of Education website is launched.

According to CNN, administration officials said they still expect the application to be available in October.

At least five lawsuits in courts across the country accuse President Joe Biden of executive over-reach and bystepping Congress in authorizing such large-scale debt relief.

The program is anchored on a 2003 law giving the Education Department the authority to waive loan requirements to help borrowers in an emergency.

The Washington Post reported a federal judge in Missouri was scheduled on Wednesday to hear a lawsuit to stop the program filed by six Republican-led states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina.

Among five legal challenges filed, it may pose the biggest threat to the program and stop it before the formal rollout. According to the Post, Plaintiff states not only accuse Biden of overstepping his executive authority but, importantly, say the program threatens the revenue of state entities that profit from loans made under the Federal Family Education Loan program.

The FFEL program sun-setted in 2010, and its loans were split between the Education Department and private loan companies. Those in the latter category are typically excluded from debt forgiveness programs.

Borrowers were advised consolidate those loans into the federal Direct Loan program to qualify for the debt relief program. The Biden administration’s announcement of the program triggered a spike in consolidations among commercial FFEL borrowers, The Washington Post reported.

However, the department changed its guidance about two weeks ago. Now, only those who consolidated their loans before Sept.29 are eligible. According to the Post, the change affected nearly 800,000 borrowers.

Other legal challenges have been filed by the state of Arizona, a taxpayers group in Wisconsin, a former U.S. Senate candidate from Oregon and a libertarian attorney in Indiana to stop the forgiveness plan, Bloomberg reported

As of 2021, nearly 166 million borrowers owe a collective $1.59 trillion in student loans, more than Americans owe on their auto loans or credit card balances, according to credit reporting agency Experian’s most recent State of Student Loan Debt report.

The average balance per borrower increased slightly in 2021 to $39,487, up nearly $700 from 2020, according to Experian.

An August survey conducted by the credit monitoring company ScoreSence revealed only 14 percent of U.S. borrowers with federal student loans on pause could afford the payments with no issues when the forbearance period ends. The survey also revealed that 42 percent of borrowers aren't sure how they will add loan payments back into their budget.