On Thursday, September 29, the Biden-Harris administration and the Department of Education (DOE) released two updates to the three-part student debt relief plan they announced in August. These updates include guidance on program eligibility requirements and provide insight into the cost of the program.
On Thursday, September 29, the DOE circulated a press release outlining how borrowers will be able to apply for the Student Debt Relief Plan. The application period for the program will begin in October 2022, and extend until the end of December 2023. In October, borrowers who have federal loans and earned less than $125,000 if filing taxes separately or less than $250,000 if married and filing jointly or as head of household in 2020 or 2021 will be eligible for up to $20,000 in debt relief if they received a Pell Grant in college and up to $10,000 in debt relief if they didn't receive a Pell Grant.
The DOE provided a variety of resources in its release to help borrowers prepare for the application's launch. The agency recommends that borrowers create a StudentAid.gov account or log in to their account to check that their contact information is up-to-date. Borrowers are also advised to assure that their loan servicer has up-to-date contact information. Anyone wishing to receive a notification when the application opens in October can sign up for alerts on the DOE subscription page.
Additionally, the DOE released a cost estimate of the Student Debt Relief Plan, finding that it will cost an average of $30 billion a year over the next decade and around $379 billion over its lifetime. This comes after the Congressional Budget Office (CBO) circulated a report earlier in the week estimating that the program will cost about $400 billion total. The difference in estimates can likely be attributed to variability in the predicted participation rates, interest rates, wage growth and other economic uncertainties.
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