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What to know if you're hoping for student loan cancellation

AILSA CHANG, HOST:

You've probably heard the topline numbers on the Biden administration's student debt forgiveness plan by now. Up to $10,000 of loans can get cancelled if you are an individual making under $125,000 per year. Up to $20,000 of your loans can get cancelled if you also went to a school on a Pell Grant. Those are grants for students from low-income families. But when you start to get into the details, well, this program - it seems like it gets more 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 right now. And for that, I'm joined by NPR education reporter Sequoia Carrillo and Carolina Rodriguez, director of the Education Debt Consumer Assistance Program, which helps New Yorkers navigate student loan repayment. Welcome to both of you.

SEQUOIA CARRILLO, BYLINE: Thank you.

CAROLINA RODRIGUEZ: Thanks for having me.

CHANG: I suppose one key question in all of this is who exactly qualifies, right? And, Sequoia, I'd love to go to you for that because I know that $125,000 is the annual income threshold for individuals. But a lot of people's income - it's fluctuated - right? - during the pandemic. So how is the federal government going to determine what your official annual income is?

CARRILLO: Yeah. This is a great question and one I've been hearing from borrowers a lot. And 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.

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 and 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.

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

CARRILLO: Thank you.

RODRIGUEZ: Thank you.

(SOUNDBITE OF AKEMI FOX SONG, "SO FINE") Transcript provided by NPR, Copyright NPR.

Sequoia Carrillo is an assistant editor for NPR's Education Team. Along with writing, producing, and reporting for the team, she manages the Student Podcast Challenge.
Ailsa Chang is an award-winning journalist who hosts All Things Considered along with Ari Shapiro, Audie Cornish, and Mary Louise Kelly. She landed in public radio after practicing law for a few years.
Bridget Kelley
Bridget Kelley is the Supervising Senior Editor of NPR's award-winning afternoon newsmagazine, All Things Considered.