Student loan forgiveness in hands of ‘understaffed and overstretched’ education department

Implementing President Biden’s widespread and targeted student loan income exemption is shaping up to be a bureaucratic task challenge for the Ministry of Education.

Why is this important: Millions of Americans are in limbo as they await information on how to act on student debt relief — the success of which rests in large part on an agency juggling unprecedented change, in addition to other reforms.

  • The agency does not have income data for most of the 43 million Americans eligible for pardons, or about 35 million people. including Pell Grant recipients — will have to certify that they earn less than $125,000 a year and apply for relief.

What we are looking at: StudentAid.gov, the government’s financial aid website, experienced significant delays Wednesday and Thursday after it was inundated with people seeking information about loan forgiveness.

  • The White House doesn’t know exactly how many eligible borrowers will end up applying for loan forgiveness — or how much it will cost.
  • The Department for Education has yet to publish the website where people can apply for loan forgiveness by showing they meet the income requirements – and it is still unclear when this will be published, told Axios a person close to the file.

Most important: When will borrowers actually see relief?

  • “That’s the million dollar question,” Education Secretary Miguel Cardona told NPR on Wednesday.
  • “It’s really important for people to know that we’re also improving a system that was broken and outdated,” he added.

How it will work: The roughly 8 million eligible borrowers for whom the agency already has income information will receive automatic debt relief.

  • For everyone else: The White House is asking them to sign up for Department of Education updates to receive more information on how to apply.

But, but, but: Experts warn that the agency may not be equipped to accomplish such a massive undertaking.

  • “It’s an understaffed and overstretched organization,” Charlie Eaton, associate professor of sociology at UC Merced and student loan expert, told Axios.

The catch: The Biden administration has said the moratorium on loan repayments will end in January — and for that to happen “it’s going to be really important that borrowers have actually had a chance to declare their eligibility for loan forgiveness,” it said. Eaton said.

  • “Even if borrowers complete online attestations of their income and the online system is working, then loan servicers will need enough time to adjust each borrower’s balance and new payment levels,” it adds. -he.
  • Education Ministry officials did not respond to requests for comment.

Meanwhile: Some Americans simply won’t engage on the government’s website — and they may fall through the cracks and never get the relief they’re entitled to, says Bryce McKibben, former senior policy adviser to Sen. Patty Murray (D-Wash.) on the Senate Committee on Health, Education, Labor and Pensions.

  • “It should be a relatively simple app, but that doesn’t mean people won’t have trouble using it,” said McKibben, who is now senior policy and advocacy director at the Hope Center. Temple University.
  • “It will likely take years to fully process all cancellations for every eligible person…and even then we will still miss some people,” he added.

The Imminent Onslaught of relief seekers comes as the agency is also tasked with implementing the $32 billion in targeted loan reliefs previously announced.

  • These include programs for borrowers who have been defrauded by their colleges, disabled borrowers, and government officials, in addition to income-tested repayment programs.

The bottom line: “It’s just a massive amount of change and stress on the student loan system all happening at once,” McKibben said.

Go further… Biden forgives up to $20,000 in student loans for Pell Grant recipients, $10,000 for millions more

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