Student loan forgiveness may be on the way for millions of borrowers

U.S. President Joe Biden speaks as he announces a new plan for federal student loan relief during a visit to Madison Area Technical College Truax Campus, in Madison, Wisconsin, U.S, April 8, 2024. 

Kevin Lamarque | Reuters

The Biden administration is sending emails to tens of millions of borrowers this week about its new plans to cancel student debt.

“We want to make you aware of this potential relief,” the U.S. Department of Education writes in the email, which CNBC reviewed.

The Department of Education estimates that at least 25 million borrowers could qualify.

Who will be eligible?

Is there anything I need to do?

Those who want to be included in the relief do not need to do anything, the Education Department said. No application will be needed.

However, if, for some reason, a borrower wants to opt out of the debt forgiveness, they must do so by Aug. 30 with their loan servicer.

When could I see the relief?

The Education Department is expected to publish its final rule on the debt relief sometime in October. Once that happens, it will likely move to cancel people’s loans quickly to get ahead of lawsuits, said Luke Herrine, an assistant professor of law at the University of Alabama.

“It is often harder to undo something rather than prevent its being done, both administratively and legally,” Herrine said.

“And if the administration doesn’t wait, it forces opponents to put together a lawsuit quickly and without full information,” Herrine said.

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Yet opponents of the relief may already be prepared to fight it, said higher education expert Mark Kantrowitz.

“Most likely a lawsuit will be filed the day the rule is final, seeking a temporary injunction to prevent the Biden administration from forgiving loans” while the legal battle plays out, Kantrowitz said.

In that case, borrowers may be stuck waiting for news on the relief for months or longer. The case may even go to the Supreme Court again, where it is uncertain if it would survive.

Will I owe taxes on any forgiven debt?

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