Student loan relief goes live, despite lawsuits

WASHINGTON — President Joe Biden on Monday officially kicked off the application process for his student debt cancellation program — despite lawsuits intending to stop it, including from Iowa officials — and announced that 8 million borrowers already had applied for relief during a soft launch period over the weekend.

He encouraged the tens of millions eligible for potential relief to visit studentaid.gov and touted the application form that the president said would take less than five minutes to complete. An early "beta launch" version of the online form released late Friday handled the early stream of applications "without a glitch or any difficulty," Biden said.

"It means more than 8 million Americans are starting this week on their way to receiving life-changing relief," Biden, accompanied by Education Secretary Miguel Cardona, said Monday.

The number of borrowers who applied during the testing period already amounts to more than one-fourth of the total number of applicants the administration had projected would submit forms, underscoring the popularity of the program and the eagerness of borrowers to receive the debt relief. Some 8 million borrowers who have income information already on file with the Education Department would see their debt canceled without applying.

Biden's plan calls for $10,000 in federal student debt cancellation for those with incomes below $125,000 a year, or households that make less than $250,000 a year. Those who received federal Pell Grants to attend college are eligible for an additional $10,000. The plan makes 20 million eligible to get their federal student debt erased entirely.

According to the White House, over 400,000 Iowa borrowers will see some student loan debt forgiven. Of those, nearly 250,000 are Pell Grant recipients and are eligible for up to $20,000 in forgiveness. Pell Grants go to students from low-income families.

Iowans owe a total of $13.3 billion in student debt. The average amount owed by each Iowa borrower is close to $31,000.

Iowa and five over Republican-led states have sued to stop the program. In a statement late last month, Iowa Gov. Kim Reynolds argued the wide-scale debt relief is fundamentally unfair to hard-working Americans to have their tax dollars used to forgive student loan debt of the “well-off who can afford to pay their own loans.”

“A significant majority of Americans have already paid off their student loans or chose not to pursue a higher education degree at all,” Reynolds said. “By forcing them to pay for other people’s loans — regardless of income — President Biden’s mass debt cancellation punishes these Americans and belittles the path they chose. ”

A federal judge in St. Louis is now weighing the states' request for an injunction. In court documents, the Education Department has vowed not to finalize any of the debt cancellation before Oct. 23.

Biden promised to pursue widespread student debt forgiveness as a presidential candidate, but the issue went through more than a year of internal deliberation amid questions about its legality. His plan sparked intense debate ahead of the midterm elections, with Republicans and some Democrats saying it's an unfair handout.

Monday, Biden offered a full-throated defense of his decision and predicted it will prevail over the lawsuits to stop it.

"My commitment was if elected president, I was going to make government work to deliver for the people," Biden said. "This rollout keeps that commitment."

He also took aim at the Republican officials who have either criticized the plan or are working in court to defeat it.

"Their outrage is wrong and it's hypocritical," Biden said. "I will never apologize for helping working Americans and middle class people as they recover from the pandemic.“

Biden said the White House has received more than 10,000 comments and calls of thanks from borrowers. Indeed, thousands took to social media to share the form, with many saying they submitted their applications with little trouble.

The Biden administration has touted it as a "simple, straightforward" application. It asks for the borrower's name, Social Security number, contact information and date of birth. It does not require income information but asks users to check a box attesting that they are eligible under the program's income limits.

That information will be checked against Education Department records to help identify applicants who are likely to exceed the income limits, the administration says. Those people will be asked for more information to prove their incomes.

An estimated 1 to 5 million people will be required to provide that extra documentation, the Education Department told the White House's Office of Management and Budget.

Once the Education Department begins processing applications, borrowers should expect to see their debt forgiven in four to six weeks, officials say. Most applications submitted by mid-November will be processed by Jan. 1 — the day federal student loan payments are set to resume after being paused during the pandemic.

Borrowers can submit applications through the end of 2023.