What you need to know about student loan debt forgiveness : Consider This from NPR President Biden's plan to forgive federal student loan debt – up to $20,000 for Pell Grant recipients and up to $10,000 for others who qualify – leaves millions of borrowers with unanswered questions.

NPR's Sequoia Carrillo and Carolina Rodriguez of the Education Debt Consumer Assistance Program in New York, examine the new plan and help answer some of the frequently asked questions about how it would work.

This episode features reporting from NPR's Scott Horsley.

In participating regions, you'll also hear a local news segment to help you make sense of what's going on in your community.

Email us at considerthis@npr.org.

What You Need To Know About Biden's Plan to Forgive Student Loan Debt

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AILSA CHANG, HOST:

It took Dylan Roth a decade to pay off his student loans. He made his final payment just this past Tuesday, one day before President Biden announced a sweeping plan to forgive a lot of federal student loan debt - a plan that made Roth feel maybe he'd paid up too soon.

DYLAN ROTH: It just kind of feels like a joke - that I would slide this check under the door at the buzzer and then discover that I don't have to.

CHANG: Biden's plan would cancel up to $10,000 of loans for borrowers making up under $125,000 a year, and it would cancel up to $20,000 for loans for lower-income Pell Grant recipients. Under this new plan, Roth would be able to apply for a refund for payments made since March 2020. That's when the government hit pause on payments during the pandemic. But, you know, he says, even if he doesn't get all his money back, he's glad student debt forgiveness is happening.

ROTH: Honestly, I went through a cycle of feelings very quickly - first, the initial surprise that the student loan forgiveness program was going to be happening; then, immediately, frustration and rage (laughter) that I had just - and panic trying to get my $2,100 back; but very quickly, acceptance as I start to think about the big picture of this.

CHANG: Because Roth gets it. Debt cancellation is going to be life-changing for a lot of people.

Trianna Downing started dancing when she first heard the news.

TRIANNA DOWNING: Oh my - oh. I feel like I can't even it process it yet. I'm like, wait, what?

CHANG: But then she went from ecstatic to, wait, how is this actually going to work?

DOWNING: It's not that it's too good to be true. It's just, like, when, when, when? But I feel like - I mean, I'm very, very, very grateful 'cause this is, like, obviously a big, big help to me personally.

CHANG: Downing expects her debts to drop from $16,000 to 6,000. She says she could pay that off in a year and apply to grad school next year. But some other borrowers wish the federal government was doing more.

CAROL OLDHAM: It's not quite as much as I had hoped, just in terms of more - being better for making things more equal - a more equal playing field.

CHANG: Carol Oldham says she and her husband have about $30,000 in student loans put together. And with this relief, their debt will go down to $10,000.

OLDHAM: Which makes a huge difference in the amount that we're paying each month, right? It's sort of the difference between being something where, like, we have to be really careful about how we spend money in the rest of our lives and being able to have a little bit more freedom to put money back into the economy.

CHANG: Like, they're looking at getting a newer used car, since their current car has been struggling to keep running. But, you know, as grateful as she is, she wants to see the government address the root causes of the student debt crisis, like the rising cost of higher education. And she takes issue with those who see loan forgiveness as some gift to the wealthy.

OLDHAM: If you're wealthy, you don't have to take out loans to start with. And so generally speaking, the folks with a lot of loans tend to be people who are not from the most advantaged part of society.

CHANG: As for Dylan Roth - the guy we heard from at the beginning of this episode - he says he did feel some regret for, as he put it, giving away a few months' rent right before Biden announced this plan. But...

ROTH: I think it's silly to be angry about debt forgiveness. If you don't ever want conditions to get better or easier for the people who come after you, then nothing will ever get better.

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CHANG: CONSIDER THIS - student loan forgiveness is complicated and controversial. Some say it's not enough. Others say it shouldn't happen at all. Coming up, we'll take a look at that debate, as well as who qualifies for debt relief and how to apply.

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CHANG: From NPR, I'm Ailsa Chang. It's Friday, August 26.

It's CONSIDER THIS FROM NPR. For Democratic Senator Elizabeth Warren of Massachusetts, who's a longtime advocate for student loan forgiveness, this week's announcement was cause for celebration.

ELIZABETH WARREN: Look - 20 million Americans learned that they never have to pay another nickel of student loan debt, and 23 million more Americans learned that the amount they owed on their student loans when COVID hit is now substantially reduced. So yea. Would I like more? You bet I would. Will I keep fighting for it? Of course. But this is huge.

CHANG: She called this plan, quote, "one of the biggest acts of consumer debt relief in American history." And she took issue with critics who say that cancelling student debt will make inflation worse.

WARREN: The data just don't back that up. Even the most conservative outlets that have looked at this have said maybe it'll have a tiny little effect on inflation. But here's the thing - they forget the other half. The president has paired cancellation of student loan debt with the resumption of payments for the 23 million Americans who will still owe student loan debt. That means that, for 23 million Americans, there's going to be a new payment starting, which has a deflationary effect - not an inflationary effect.

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CHANG: But inflation is not the only issue that critics of this plan are raising. Another big complaint has to do with fairness.

MARC GOLDWEIN: I still think a lot of this benefit is going to go to doctors, lawyers, MBAs, other graduates that have very high earnings potential and may even have very high earnings this year already.

CHANG: Marc Goldwein is with the Committee for a Responsible Federal Budget. He worries about the message that the administration is sending when it erases student debt.

GOLDWEIN: People are going to assume there's a likelihood that debt is canceled again and again. And if you assume there's a likelihood it's canceled, you're going to be more likely to take out more debt upfront. That's going to give colleges more pricing power to raise tuition without pressure and to offer more low-value degrees.

CHANG: In the days since the plan was announced, millions of borrowers have been trying to figure out if they qualify and, if so, how to get relief under this plan. But when you start to get into the details, it gets kind of complicated. That might be why Education Secretary Miguel Cardona name-checked a URL not once, but twice, when we spoke to him this week.

MIGUEL CARDONA: So what we're asking folks to do is visit studentaid.gov/debtrelief and sign up for automated emails so that more information can come.

CHANG: Well, if you prefer interviews to automated emails, we're going to talk through some of the key questions that borrowers might have. Sequoia Carrillo is a reporter with NPR's education team, and Carolina Rodriguez is director of the Education Debt Consumer Assistance Program, which helps New Yorkers navigate student loan repayment. And we started with a seemingly simple question - who qualifies? Here's Sequoia.

SEQUOIA CARRILLO, BYLINE: In a White House press call right after the announcement, they mentioned that if your annual income was below the threshold in either 2020 or 2021, then you could qualify. But it has yet to be formally announced. So once we have that paper in front of us that we know it's set, I would feel fully secure in it. But for right now, that's kind of what we're hearing. But we have to remember - there isn't even a system yet, really, for this. So we're...

CHANG: Right.

CARRILLO: ...In the early stages.

CHANG: I mean, in terms of who is included in this loan forgiveness program, what about, like, current students? And also, what about parents who took out federal Parent PLUS loans to put their children through school? Are they all included in this?

CARRILLO: So the good news is both are included, which is really exciting and a little bit surprising. For current students, it's pretty straightforward. They will qualify based on their parents' income as long as they are still claimed as dependents on their parents' taxes. For Parent PLUS loans, there is a little bit of a caveat. Only Parent PLUS loans managed by the Department of Education qualify. And this is unusual. Parent PLUS loans are not included in a lot of forgiveness programs, so there could be some odd situations around this one. It's just a tricky type of loan. Like, if a parent, in their undergraduate degree, took out a Pell Grant, then does their Parent PLUS loan that they took out after they'd already had their personal debt - does that count towards the $20,000 in forgiveness? We don't know yet. So Parent PLUS loans are a little bit trickier. But for current students, it is pretty cut and dry. It's based off of your parents' income.

CAROLINA RODRIGUEZ: Can I chime in related to that?

CHANG: Absolutely, yeah.

RODRIGUEZ: Because it's going to torture me. So one of the biggest concerns I have in terms of what loans qualify - obviously, the basic answer is loans held by the U.S. Department of Education. But there are still a lot of borrowers out there that do not have their loans held by the Department of Education. We're talking about FFEL and potentially Perkins loans. So those individuals - the good news is that they can consolidate their loans to make them into direct loans. And at that point, they would be eligible for cancellation. And I really worry that a lot of people are going to assume that all their loans qualify, when, in fact, some of them would need to take an additional step before they're eligible for cancellation.

CHANG: OK - important to note. Well, Carolina - just a very basic question for you - I can imagine, since there was a pause during the pandemic on federal student loan repayment, a lot of people haven't looked up their balances in a while, right? Like, so real quick, where would I go to see what my balance is and who I need to talk to about my loan?

RODRIGUEZ: So there is one website that I think it's really important to emphasize, and that is studentaid.gov. That is the government's national student loan database. So if you have a federal student loan, you're going to see it there. And the reason why I say that is the best source is because individuals may have, for example, different servicers. So if they go to their servicer account, they may be missing on loan information.

So again, you definitely want to go in - into studentaid.gov. If you have never created an account, you can actually create it. If you have an account and forgot your username or password, it takes about five minutes to reset that and for you to be able not only to look at your current status in terms of federal loans, but also to determine if you ever got a Pell Grant. And that should be visible in your dashboard as soon as you log in into that account.

CHANG: OK. Well, because student loan forgiveness has been a contentious issue among lawmakers for several years, one question I think a lot of people may have at this point is, well, how real and everlasting is this Biden plan? Like, Sequoia, do we know about any potential challenges to this plan already?

CARRILLO: So right now, we don't know of any concrete challenges. But for a long time, Republicans and some Democrats have been asking whether or not this is constitutional. So as soon as the press release went out, as soon as this went up on Twitter and the world found out about this program, journalists received a one-pager on how they are doing this. So they're citing the HEROES Act, which is an act that was passed in the wake of 9/11, and it gives the secretary of education authority to relieve citizens of debts in times of natural disaster and national emergency. This is the same act that the Trump administration relied on when they started the student loan payment pause back in 2020. So that's what we know on the government side.

But on the student side, all you can do right now is wait, unfortunately. A borrower put it well to me recently when they said that they are cautiously optimistic, but they won't believe it until they see it with their own eyes. And I think that's kind of the way to go.

CHANG: Yeah, exactly. Well, in terms of, like, how this program would get administered, I know, like, the Department of Education says it has income information for something like 8 million borrowers. So those people would get this loan cancellation automatically, I hear. Other people are going to have to apply. Carolina, with respect to people who most need this kind of debt relief, what concerns do you have about their ability to clear all the hurdles - all the bureaucracy - and actually get the help they need?

RODRIGUEZ: It's a real concern. I think whenever people have to take action steps - for example, like providing income information - it's a real hurdle, in part because, chances are, they're going to have to log in, create an account, use technology. And the people that are really struggling to keep up with the paperwork to keep up with the loans can't do that. They either lack the information they need to do it successfully, or sometimes there's a digital divide, and they don't have access to the technology to do so. So I am really concerned about that. That is top of mind, where I'm going to have to create some type of outreach plan that, again, makes sure we do not leave those who really will benefit from this relief out just because they couldn't apply or they couldn't apply on time or provide the correct paperwork.

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CHANG: That was Carolina Rodriguez of New York's Education Debt Consumer Assistance Program and Sequoia Carrillo of the NPR education team.

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CHANG: It's CONSIDER THIS FROM NPR. I'm Ailsa Chang.

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